2015 Blue Cross and Blue Shield of Kansas City Individual-1 Rate Filing

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum
Part III Actuarial Memorandum
Blue Cross and Blue Shield of Kansas City

Individual Rate Filing
Effective January 1, 2015
Prepared for:
Missouri Department of Insurance
Prepared by:
Thomas Nightingale, FSA, CERA, MAAA
Vice President, Finance & Chief Actuary
One Pershing Square

2301 Main
Kansas City, MO 64108
Tel (888) 989-8842
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BCBSKC Individual Rate Filing
June 26,2014

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TABLE OF CONTENTS
The following table summarizes the exhibits included in this document. Some exhibits may span multiple pages.
Exhibit #
Exhibit Title
Exhibit 1
General Information
Exhibit 2
Proposed Rate Increase(s)
Exhibit 3
Exp Premium and Claims
Exhibit 4
Benefit Categories
Exhibit 5
Projection Factors
Exhibit 6
Credibility Man Rate Dev
Exhibit 7
Credibility of Experience
Exhibit 8
Paid to Allowed Ratio
Exhibit 9
Risk Adj and Reinsurance
Exhibit 10
NBE, Profit, & Risk
Exhibit 11
Projected Loss Ratio
Exhibit 12
Single Risk Pool
Exhibit 13
Index Rate
Exhibit 14
Market Adj Index Rates
Exhibit 15
Plan Adj Index Rates
Exhibit 16
Calibration
Exhibit 17
Cons Adj Prem Rate Dev
Exhibit 18
AV Metal Values
Exhibit 19
AV Pricing Values
Exhibit 20
Membership Projections
Exhibit 21
Terminated Products
Exhibit 22
Plan Type
Exhibit 23
Warning Alerts
Exhibit 24
Eff Rate Review Info
Exhibit 25
Reliance
Exhibit 26
Actuarial Certification
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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 Part
I Unified Rate Review Template.
The purpose of the actuarial memorandum is to provide certain information related to the submission, including support for
the values entered into the Part I Unified Rate Review Template, which supports compliance with the market rating rules and
reasonableness 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
State: The State of Missouri has regulatory authority over these policies.
HIOS Issuer ID: 34762
Market: Individual
Effective Date: January 1, 2015
Company Contact Information
Primary Contact Name: Dustin Tindall
Primary Contact Telephone Number: (816) 395-2295
Primary Contact Email Address: Dustin.Tindall@BlueKC.com
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EXHIBIT 2. PROPOSED RATE INCREASE(S)

Table 2.1 summarizes proposed rate increases by product effective January 1, 2015. The following are significant factors driving
the proposed rate increases discussed below.
Table 2.1
Attribution Analysis of Proposed Rate Increases
Value
$233.92
1.115
1.048
0.959
0.980
$256.99
Factor
2014 Rate
Trend & Change in Underlying Experience
Transitional Reinsurance Benefit Factor
Non Benefit Expense Factor
Medical Management
2015 Rate
Medical Inflation & Increased Utilization
Claims costs were increased for anticipated changes due to medical/prescription drug inflation and increased medical/prescription
drug utilization. Below are the percentage increases for these changes:
Table 2.2
Unit Cost and Utilization Trend Assumptions
Service Type
Inflation Utilization
Total
Inpatient
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%
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, there
are expected changes in certain administrative costs. The following is a list of any anticipated changes and comments regarding
the adjustment:
Item
Transitional
Reinsurance
Table 2.3
Anticipated Non-Benefit Expenses Changes
Prior Year Effective
Value
Year Value Reason for Adjustment
Commissions
$5.25
$3.67
5.4%
3.2%
See below
This 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

Effective January 1, 2015 benefits have changed based on state requirements, business decisions and new Actuarial Value
Calculator 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-ofnetwork 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.
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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 new
CMS guidance using the Federal AV calculator for 2015 (CMS now requires 99.99% to be entered for non-copay based plans with
100% coinsurance), our 2014 plan design fell outside the 2% de minimis range. The benefit change noted above is to bring the
plans AV back into the de minimis range. We analyzed the impact of the benefit change using the Milliman Health Cost Guidelines
and 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 $6,350
to $6,600. The 2015 deductible and out-of-pocket maximum required for catastrophic plans changed from $6,350 to $6,600. We
analyzed the impact of the benefit change using the Milliman Health Cost Guidelines and we determined it to be a -1.4% decrease
in benefits.
Federal Transitional Reinsurance Program Changes
Federal transitional reinsurance program contributions and benefit limits have changed from last year. Specifically, the reinsurance
contribution has changed from $63 PMPY to $44 PMPY. Further, the claims threshold upon which reinsurance recoveries are
triggered 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 the
individual 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:
Product
Blue & U First PCB Silver
Blue & U First PCB Bronze
Blue & U Classic PCB Gold
Blue & U Classic PCB Silver
Table 2.4
Summary of Proposed Rate Increases
2014 Rate
2015 Rate
$245.46
$282.63
$250.36
$288.33
$188.34
$207.04
$192.61
$211.73
$318.18
$349.78
$324.05
$356.22
$264.91
$291.21
Rate Increase
15.1%
15.2%
9.9%
9.9%
9.9%
9.9%
9.9%
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Product
Blue & U Saver PCB Silver
Blue & U Saver2 PCB Silver
Blue & U Saver PCB Bronze
Blue & U Saver2 PCB Bronze
Blue & U SafetyNet PCB
Blue & U First Select Silver
Blue & U First Select Bronze
Blue & U Classic Select Gold
Blue & U Classic Select Silver
Blue & U Saver Select Silver
Blue & U Saver2 Select Silver
Blue & U Saver Select Bronze
Blue & U Saver2 Select Bronze
Blue & U SafetyNet Select
Blue & U Basic Select Silver
Blue & U Basic Select Bronze
Table 2.4 (cont.)

Summary of Proposed Rate Increases
2014 Rate
2015 Rate
$268.50
$295.16
$246.41
$270.87
$240.77
$264.68
$240.95
$264.87
$188.39
$207.09
$216.09
$237.54
$153.11
$165.88
$208.64
$240.23
$212.81
$245.08
$160.09
$175.99
$163.72
$179.97
$270.45
$297.31
$275.44
$302.79
$225.18
$247.54
$228.22
$250.89
$209.45
$230.25
$204.81
$225.14
$160.13
$176.03
$183.67
$201.91
$130.14
$141.01
N/A
$258.46
N/A
$202.06
N/A
$231.94
N/A
$224.98
N/A
$219.69
N/A
$171.75
N/A
$197.15
N/A
$213.16
N/A
$159.72
N/A
$218.15
N/A
$163.44
Rate Increase
9.9%
9.9%
9.9%
9.9%
9.9%
9.9%
8.3%
15.1%
15.2%
9.9%
9.9%
9.9%
9.9%
9.9%
9.9%
9.9%
9.9%
9.9%
9.9%
8.3%
New Plan in 2015
New Plan in 2015
New Plan in 2015
New Plan in 2015
New Plan in 2015
New Plan in 2015
New Plan in 2015
New Plan in 2015
New Plan in 2015
New Plan in 2015
New Plan in 2015
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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 I
Unified Rate Review Template:
Table 3.1
Experience Allowed Claims and Premium
Total Billed Allowed

Medical
Month Premiums
Jan 13 $3,008,674 $2,841,401
Feb 13 $3,045,427 $2,380,368
Mar 13 $3,071,347 $2,798,721
Apr 13 $3,180,675 $3,415,391
May 13 $3,206,331 $3,324,364
Jun 13 $3,274,240 $3,469,377
Jul 13
$3,397,421 $4,098,713
Aug 13 $3,466,472 $3,699,234
Sep 13 $3,577,436 $3,788,816
Oct 13 $3,713,818 $3,963,426
Nov 13 $3,785,968 $3,678,671
Dec 13 $3,978,932 $4,469,840
Total $40,706,740 $41,928,322
Total
Medical
Rx
Claims
Allowed
Completion Estimated
Including
Allowed Rx
Medical
Rx
Capitation
Factor
Factor
IBNR
1.0016
$2,836,795
$451,644
0.9989
$452,136
$23,024 $3,311,955
1.0013
$2,377,187
$391,751
0.9988
$392,205
$23,776 $2,793,167
1.0012
$2,795,245
$431,785
0.9988
$432,302
$24,352 $3,251,898
1.0011
$3,411,618
$466,163
0.9987
$466,747
$25,219 $3,903,585
1.0008
$3,321,672
$464,954
0.9988
$465,522
$25,882 $3,813,076
1.0003
$3,468,364
$458,836
0.9987
$459,417
$26,535 $3,954,316
0.9995
$4,100,877
$477,978
0.9987
$478,601
$27,339 $4,606,817
0.9946
$3,719,229
$529,569
0.9987
$530,264
$28,369 $4,277,862
0.9935
$3,813,438
$505,446
0.9986
$506,137
$29,482 $4,349,057
0.9890
$4,007,377
$562,247
0.9986
$563,060
$30,596 $4,601,033
0.9830
$3,742,460
$572,431
0.9984
$573,329
$31,590 $4,347,379
0.9730
$4,593,788
$676,211
0.9982
$677,414
$33,476 $5,304,678
0.9938
$42,188,049 $5,989,015
0.9986
$5,997,134
$329,639 $48,514,822
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 also
include claims not tied to a specific date of service, such as capitation or risk sharing payments, if the payments were for services
provided 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:
Ineligible claims such as duplicate claims, third party liabilities (e.g. coordination of benefits claims), and any other claims
that are denied under the policy terms.
Payments for services other than medical care provided, (e.g., medical management, quality improvement, and fraud
detection 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 traditionally
defined 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 I
Unified Rate Review Template:
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EXHIBIT 3. EXPERIENCE PREMIUM AND CLAIMS

Table 3.2
Experience Incurred Claims and Premium by Product
Total Billed
Paid
Medical
Month Premiums
Jan 13 $3,008,674 $1,625,375
Feb 13 $3,045,427 $1,468,202
Mar 13 $3,071,347 $1,905,948
Apr 13 $3,180,675 $2,365,646
May 13 $3,206,331 $2,340,163
Jun 13 $3,274,240 $2,515,574
Jul 13
$3,397,421 $3,127,159
Aug 13 $3,466,472 $2,645,554
Sep 13 $3,577,436 $2,624,208
Oct 13 $3,713,818 $2,798,632
Nov 13 $3,785,968 $2,709,477
Dec 13 $3,978,932 $3,305,067
Total $40,706,740 $29,431,004
Medical
Medical
Factor
1.0016
$1,622,743
1.0013
$1,466,249
1.0012
$1,903,601
1.0011
$2,363,032
1.0008
$2,338,301
1.0003
$2,514,819
0.9995
$3,128,835
0.9947
$2,659,638
0.9936
$2,641,234
0.9890
$2,829,637
0.9830
$2,756,456
0.9730
$3,396,807
0.9936
$29,621,352
Paid Rx
$329,538
$290,026
$322,705
$351,194
$346,097
$353,450
$358,652
$402,919
$386,699
$426,885
$445,639
$528,884
$4,542,686
Total
Rx
Claims
Paid
Including
Rx
Capitation
Factor
IBNR
0.9989
$329,900
$23,024 $1,975,667
0.9988
$290,366
$23,776 $1,780,390
0.9988
$323,096
$24,352 $2,251,049
0.9987
$351,640
$25,219 $2,739,891
0.9988
$346,524
$25,882 $2,710,707
0.9987
$353,904
$26,535 $2,895,258
0.9987
$359,128
$27,339 $3,515,301
0.9987
$403,453
$28,369 $3,091,460
0.9986
$387,233
$29,482 $3,057,949
0.9985
$427,508
$30,596 $3,287,740
0.9984
$446,344
$31,590 $3,234,391
0.9982
$529,835
$33,476 $3,960,118
0.9986
$4,548,930
$329,639 $34,499,921
All paid claims processed both in and out of the claim system were included. All of the medical claims were processed within the
system and the prescription drug claims were processed outside of the system. An estimate of incurred but not paid claims was
added to the processed amount to arrive at a final estimate of total paid claims. No estimate of incurred but not paid claims was
added 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 were
processed within the system and the prescription drug claims were processed outside of the system. An estimate of incurred but
not 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
Liabilities for both incurred but not reported and received but not yet paid claims are determined using actuarial methods that are
commonly used by health insurance actuaries and meet Actuarial Standards of Practice. Actuarial Standards of Practice require
that the claims liabilities be adequate under moderately adverse circumstances. BCBSKC determines the amount of the liability
for incurred but not reported claims by following a detailed actuarial process that uses both historical claim payments as well as
emerging medical cost trends.
For the most recent incurred months, the percentage of claims paid for claims incurred in those months is generally low. This
makes the completion factor methodology less reliable for such months. Therefore, incurred claims for recent months are not only
projected from historical completion and payment patterns; rather, they are supplemented by estimating a per member per month
claims expense based on recent experience. Seasonality adjustments are utilized where appropriate. A weighting mechanism is
used to develop final incurred claims estimates whereby, for a given month, the incurred claims developed using the completion
factor method and the incurred claims developed using the recent PMPM values are blended to arrive at a final estimate for the
th
Because the reserve methodology is based upon historical information, it must be adjusted for known or suspected operational
and 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, claim
inventory levels, claim processing patterns and claim submission patterns. A comparison of prior period liabilities to re-estimated
claim liabilities based on subsequent claims development, called a recast of claims, is also considered in making the liability
determination. The recast serves as a check on prior calculations, and can also serve as a guide to more accurately calculate
claim reserves in the future.
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EXHIBIT 4. BENEFIT CATEGORIES

We assigned the experience data utilization and cost information to benefit categories based on place and type of service
using 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 services
provided in an outpatient facility setting and billed by the facility.
Professional
Includes non-capitated primary care, specialist, therapy, the professional component of laboratory and radiology, and other
professional 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 other
services.
Capitation
Includes all services provided under one or more capitated arrangements.
Prescription Drug
Includes drugs dispensed by a pharmacy. This amount is net of rebates received from drug manufacturers.
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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
BCBSKCs proposed rate should reflect the anticipated statewide average risk level for the enrolled population in 2015. This is
necessary since the federal/state risk adjustment program will cause issuers to pay into the risk adjustment pool if they have
better than average risk, compared to the state average, and will receive funds from the pool if they have worse than average
risk. In order to have funds available to pay into the pool (if our risk is better than average) or, alternatively, to not overcharge
enrollees (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 to
return the baseline morbidity to the level implied in the 2014 rating population (see Exhibit 5 Other Adjustments for further
explanation); 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.
1. Determine the difference between the Blue KC average risk for our insured enrollees as compared to the insured risk level
for 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 the
results of this analysis, Blue KC has a risk level 12.03% below the average for all issuers in Missouri.
2. 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 are
expected to enroll, particularly more healthy people, resulting in potential adverse selection. In addition, existing high-risk
pool members are likely to move to less expensive exchange products and group enrollees may enter the individual
market 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 the
Society of Actuaries (SOA), Cost of the Future Newly Insured under the Affordable Care Act (ACA), along with the
supporting population movement and cost model for the State of Kansas. The ACA report is based on the Lewin Group
Health Benefits Simulation Model (HBSM). We also made use of state specific population and health status migration
metrics, 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 in
statewide average risk to a 50% increase. In estimating the potential cost of the currently uninsured, both the HBSM and
the Milliman model rely on self-reported health status information from the Current Population Survey and may make
different assumptions about the credibility of that data. In addition, each model makes different assumptions regarding
individual 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%, which
is approximately mid-way between at the HBSM and the Milliman models.
3. Combine steps 1 and 2 to determine the change from Blue KC average experience period risk to 2014 statewide average
risk. The final adjustment factor of 26.2% to our experience is the product of step 1 and 2. This is the estimated increase
from current Blue KC risk level to 2014 statewide average risk.
1.414 / (1 + .1203) = 1.262
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Note that since our risk level is below the current statewide average, our increase needs to be greater than 41.4% to
achieve the same final 2014 statewide average risk. The final population risk morbidity adjustment shown on worksheet #1
of the Unified Rate Review template reflects the shift in the actual expected morbidity of BCBSKC, which is below the
anticipated state average risk morbidity level. The remaining portion of the total risk adjustment is therefore an anticipated
risk 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 developed
by the following method:
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 geographic
mix 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 the
SOA study. These projections were used to determine not only the shift in the average age of the state but also that of
BCBSKC.
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 the
use of an experience base for a different population than we used in setting the 2014 rates. Therefore, in order to maintain
the same morbidity level for 2015 as for 2014, an adjustment, or calibration, factor has been applied to the CY2013 data to
adjust for the differences in populations used in the 2014 and 2015 rate setting process. BCBSKC believes the population
used 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 new
information that would allow for a change to the morbidity assumed in 2014. Therefore we believe it is appropriate to
maintain 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 projected
period experience.
The projected decrease in claims cost resulting from the addition of a new narrow network plan option in the projected
period experience.
Shifts in the mixture of services across existing network providers.
Trend Factors (Cost/Utilization)
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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 24
months. For the 12 months ending March 2013, direct pay observed trend was approximately 11.7%. Right now the trend is
increasing as the 3-month moving average trend is higher than the 12-month moving trend, but this will reverse. Projecting
trends 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. The
factor with the largest impact is the tendency of existing policyholders and new enrollees to move to higher cost sharing benefit
plans. 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 are
expecting 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 independently
and then adjusted for the above noted effect of changes in benefits, demographics and other factors such that they balance to
the overall 11% to 12% forecasted underlying claim trend. The resulting trends are best estimates of future underlying
utilization 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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June 26,2014
13_

_____________________________________________________________________
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 the
credibility of the experience. These guidelines specify 24,000 member months as 100% credible for medical and specify
the 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.
Since prescription drug and medical coverage are both covered under one plan, then the above medical formula was
used for the determination of partial credibility. The use of the CMS MA/PD credibility is appropriate given that both
MA/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%.
_____________________________________________________________________
June 26,2014
14_

_____________________________________________________________________
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 also
demonstrates that the ratio is consistent with membership projections by plan included in Worksheet 2.
Table 8.1
Paid to Allowed Average Factor Support Exhibit
Worksheet 1, Section III
Worksheet 2 Section IV
Allowed Per Member Per Month
$390.91
$390.90
Paid Per Member Per Month
$257.34
$266.84
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. The
Worksheet 2 factor shown above was measured using the projected Allowed PMPMs by plan from Worksheet 2 and the
Actuarial Value calculated using the Federal AV Calculator model.
_____________________________________________________________________
June 26,2014
15_

_____________________________________________________________________
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 in
2015. The estimates of relative risk and risk transfer payments are highly dependent on the number of currently uninsured
who 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 is
projected to be under the state average risk level. As a result BCBSKC has set premium levels at the anticipated state
average 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 markets
since 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.
Individual membership is eligible for reinsurance recoveries. Based on BCBSKCs projected enrollment mix of individual and
small 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.
_____________________________________________________________________
June 26,2014
16_

_____________________________________________________________________
EXHIBIT 10. NON-BENEFIT EXPENSES AND PROFIT & RISK

The following table summarizes retention components included in rate development.
Table 10.1
Illustration of Administrative Expenses by URRT Worksheet 1 Category
Retention Description
Annotation
PMPM % Premium Basis
Administrative Expense Load
(1)
General Administrative Expense Load
$ 39.41
9.36% % of Premium
(2)
Commissions
$ 13.33
3.16% % of Premium
(3)
+ Quality Improvement
$ 1.37
0.33% PMPM
(4) = (1) + (2) + (3)
Subtotal: Administrative Expense Load
$ 54.11
12.85%
+ Profit and Risk Load
Subtotal: Profit and Risk Load
$ 16.05
$ 16.05
3.81% % of Premium
3.81%
Taxes and Fees

Comparative Effectiveness Research Fee
Health Insurance Provider Fee
State Premium Tax
+ Exchange Fee
Subtotal: Taxes and Fees
$ 0.17
$ 10.11
$
$ 10.32
$ 20.60
0.04%
2.40%
0.00%
2.45%
4.89%
$ 90.76
21.55%
Total Retention
PMPM
% of Premium
% of Premium
% of Premium
(5)
(6)
(7)
(8)
(9)
(10) = (6) + (7)
+ (8) + (9)
(11) = (4) + (5) + (10)
Cost accounting figures were examined to determine the appropriate level for administrative expenses and then any anticipated
changes 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 remaining
0.81% in profit and risk load is intended to offset lost premium due to the inability to charge for children in excess of 3 dependents.
The following table summarizes taxes and fees included in rate development.
Table 10.2
Summary of Taxes and Fees
Description
Amount
Comparative Effectiveness Research
$0.17 PMPM
Health Insurer Fee
2.4% of Premium
3.5% of Premium
Exchange User Fee1
1
Applies to On Exchange members only
_____________________________________________________________________
June 26,2014
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.
_____________________________________________________________________
June 26,2014
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/plan
combination, 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, the
experience for these policies has only been used in the projection to the extent that BCBSKC anticipates the members in
those policies will be enrolled in their fully ACA-compliant plans during the projected period.
_____________________________________________________________________
June 26,2014
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/noncatastrophic 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.
_____________________________________________________________________
June 26,2014
20_

_____________________________________________________________________
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 14.1
Marked Adjusted Index Rate Development
Index Rate
$390.91
Net Risk Adjustment

Net Transitional Reinsurance
Exchange Fee
Impact of Market Reforms
1.344
0.956
1.031
1.324
Market Adjusted Index Rate
$517.73
The Market Adjusted Index Rate is not calibrated. This means that this rate reflects the average demographic characteristics
of the single risk pool.
Each of the above modifiers were developed as follows:
Net Risk Adjustment

The risk score for the plan's experience in 2015 is projected to be about 34% under the expected state average
risk score in 2015. The estimates of relative risk and risk transfer payments are highly dependent on the number
of currently uninsured who 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 is
projected to be below the state average risk level. As a result BCBSKC has set premium levels at the anticipated
state average risk level with the expectation that a portion of this premium will be paid to those carriers with higher
risk levels.
Net Transitional Reinsurance

This factor includes the impact of the estimated Transitional Reinsurance PMPM recovery in addition to the
assumed recoveries as discussed in Exhibit 9.
Exchange user fee adjustment

The exchange user fee adjustment was determined as the weighted average of no adjustment and the exchange
user fee adjustment using the expected distribution of enrolloment sold off versus on exchange.
_____________________________________________________________________
June 26,2014
21_
_________________________________________________________________________
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

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.
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
Plan Adjusted Index Rate Development
Plan
Market
AV & Cost
Adjusted
Sharing
Index Rate
$517.73
0.684
$517.73
0.698
$517.73
0.501
$517.73
0.512
$517.73
0.846
$517.73
0.862
$517.73
0.705
$517.73
0.714
$517.73
0.655
$517.73
0.640
$517.73
0.641
$517.73
0.501
$517.73
0.575
$517.73
0.446
$517.73
0.684
$517.73
0.698
Provider
Benefits In
Tobacco
Network Addition to Surcharge
Adjustment
EHBs
Adjustment
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
Administrative
Costs Excl.
Exchange Fee
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
Plan
Specific
Adjusted
Catastrophic
Index
Eligibility
Rate
1.002
$453.62
1.002
$462.77
1.002
$332.29
1.002
$339.83
1.002
$561.38
1.002
$571.72
1.002
$467.39
1.002
$473.73
1.002
$434.75
1.002
$424.81
1.002
$425.12
1.002
$332.38
1.002
$381.25
0.902
$266.24
1.002
$385.57
1.002
$393.35
_____________________________________________________________________
June 26,2014
22_
_________________________________________________________________________
EXHIBIT 15. PLAN ADJUSTED INDEX RATES
Table 15.1 (cont.)
Plan Adjusted Index Rate Development
Plan
Total
Market
AV & Cost
Adjusted
Sharing
Index Rate
$517.73
0.501
$517.73
0.512
$517.73
0.846
$517.73
0.862
$517.73
0.705
$517.73
0.714
$517.73
0.655
$517.73
0.641
$517.73
0.501
$517.73
0.575
$517.73
0.446
$517.73
0.625
$517.73
0.489
$517.73
0.561
$517.73
0.640
$517.73
0.625
$517.73
0.489
$517.73
0.561
$517.73
0.610
$517.73
0.457
$517.73
0.624
$517.73
0.468
$517.73
0.657
Provider
Benefits In
Tobacco
Network Addition to Surcharge
Adjustment
EHBs
Adjustment
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
1.049
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.892
1.000
0.986
0.887
1.000
0.986
0.887
1.000
0.986
0.887
1.000
0.986
0.887
1.000
0.986
1.000
1.000
0.986
Administrative
Costs Excl.
Exchange Fee
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
1.236
Plan
Specific
Adjusted
Catastrophic
Index
Eligibility
Rate
1.002
$282.46
1.002
$288.85
1.002
$477.17
1.002
$485.97
1.002
$397.29
1.002
$402.66
1.002
$369.54
1.002
$361.35
1.002
$282.53
1.002
$324.06
0.902
$226.31
1.002
$414.82
1.002
$324.31
1.002
$372.26
1.002
$361.08
1.002
$352.59
1.002
$275.66
1.002
$316.42
1.002
$342.12
1.002
$256.34
1.002
$350.13
1.002
$262.31
1.000
$415.42
The Plan Adjusted Index Rates reflect the average demographic characteristics of the single risk pool and therefore are not calibrated.
_____________________________________________________________________
June 26,2014
23_
_________________________________________________________________________
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 all
plans.
Age Curve Calibration
The approximate weighted average age, rounded to a whole number, for the single risk pool is 48. The weighted average age
curve calibration factor is 1.605.
In order to determine the calibration factor for age, the projected distribution of members by age was determined. The weighted
average of the factors in the age curve was then determined using this distribution. The average age was then determined by
finding the age of a member that would have the closest factor to the weighted average age curve calibration factor. Prior to
applying the allowed rating factors for age, geography and tobacco, the plan adjusted index rates need to be divided by the age
curve calibration factor.
Additional information regarding the age curve can be found on Exhibit 17.
Geographic Factor Calibration
In order to determine the calibration factor for geography, the projected distribution of members by area was determined. The
weighted average of the area factors was then determined using this distribution. BCBSKC set its geographic area factors such
that 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.
Table 16.1
Plan Adjusted Index Rate Calibration
Plan
Plan
Adjusted
Index Rate
$453.62
$462.77
$332.29
$339.83
$561.38
$571.72
$467.39
$473.73
$434.75
$424.81
$425.12
$332.38
$381.25
$266.24
$385.57
$393.35
$282.46
$288.85
$477.17
$485.97
$397.29
$402.66
$369.54
Age
Calibration
Factor
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
1.605
Geography
Calibration Calibration
Factor
Factor
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
1.000
1.605
Calibrated Plan
Adjusted Index
Rate
$282.63
$288.33
$207.04
$211.73
$349.77
$356.21
$291.21
$295.16
$270.87
$264.68
$264.87
$207.09
$237.54
$165.88
$240.23
$245.08
$175.99
$179.97
$297.30
$302.78
$247.53
$250.88
$230.25
_____________________________________________________________________
June 26,2014
24_
_________________________________________________________________________
EXHIBIT 16. CALIBRATION
Plan
Table 16.1 (cont.)

Plan Adjusted Index Rate Calibration
Plan
Age
Geography
Adjusted
Calibration Calibration Calibration
Factor
Index Rate
Factor
Factor
$361.35
1.605
1.000
1.605
$282.53
1.605
1.000
1.605
$324.06
1.605
1.000
1.605
$226.31
1.605
1.000
1.605
$414.82
1.605
1.000
1.605
$324.31
1.605
1.000
1.605
$372.26
1.605
1.000
1.605
$361.08
1.605
1.000
1.605
$352.59
1.605
1.000
1.605
$275.66
1.605
1.000
1.605
$316.42
1.605
1.000
1.605
$342.12
1.605
1.000
1.605
$256.34
1.605
1.000
1.605
$350.13
1.605
1.000
1.605
$262.31
1.605
1.000
1.605
Calibrated Plan
Adjusted Index
Rate
$225.14
$176.03
$201.91
$141.00
$258.45
$202.06
$231.94
$224.97
$219.68
$171.75
$197.15
$213.16
$159.72
$218.15
$163.43
_____________________________________________________________________
June 26,2014
25_

_____________________________________________________________________
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 small
employer group utilizing the rating and premium adjustments as articulated in the applicable Market Reform Rating Rules. It is the
product of the Plan Adjusted Index Rate, the geographic rating factor, the age rating factor and the tobacco status rating factor. All
rating 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 those
prescribed by CMS. Industry research regarding tobacco use and differences in health costs for smokers by age was used as the
basis of our adjustment factors.
Table 17.1
2015 Age and Tobacco Factors
Age
Band
0-17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Rate
Factor
0.635
0.635
0.635
0.635
1.000
1.000
1.000
1.000
1.004
1.024
1.048
1.087
1.119
1.135
1.159
1.183
1.198
1.214
1.222
1.230
1.238
1.246
1.262
1.278
Tobacco
Factor
1.000
1.000
1.000
1.000
1.100
1.100
1.100
1.100
1.120
1.120
1.120
1.120
1.120
1.140
1.140
1.140
1.140
1.140
1.150
1.150
1.150
1.150
1.150
1.160
Age
Band
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64+
Rate
Factor
1.302
1.325
1.357
1.397
1.444
1.500
1.563
1.635
1.706
1.786
1.865
1.952
2.040
2.135
2.230
2.333
2.437
2.548
2.603
2.714
2.810
2.873
2.952
3.000
Tobacco
Factor
1.160
1.160
1.160
1.160
1.170
1.170
1.170
1.170
1.170
1.180
1.180
1.180
1.180
1.180
1.190
1.190
1.190
1.190
1.190
1.200
1.200
1.200
1.200
1.200
BCBSKC's 2015 geographic rating factors are shown below. BCBSKC is offering products in three rating regions in MO.
Table 17.2
2015 Geographic Area Factors
Area
MO KC Metro
MO Northwest
MO KC Outstate
Rate Factor
0.969
1.063
1.026
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.
_____________________________________________________________________
June 26,2014
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:
Table 17.3
Sample Consumer Adjusted Premium Rate Development
Plan Adjusted Index Rate for Blue & U Classic PCB Gold, Calibrated
Age factor for a 34-year-old
Smoker status adjustment: Smoker
MO KC Metro factor
Consumer Adjusted Premium Rate
$349.77
1.214
1.140
0.969
$469.06
_____________________________________________________________________
June 26,2014
27_

_____________________________________________________________________
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 these
values for each product.
Table 18.1
Actuarial Values
Actuarial
Actuarial Value
Value
Source
Plan
0.680 Federal AV Calculator
_____________________________________________________________________
June 26,2014
28_
________________________________________________________________________
EXHIBIT 19. AV PRICING VALUES
The following table summarizes all of the adjustments included in the AV Pricing Value:
Table 19.1
Actuarial Value Pricing Values
Plan
Total
Provider
Network
AV & Cost
Adjustment
Sharing
0.684
1.049
0.698
1.049
0.501
1.049
0.512
1.049
0.846
1.049
0.862
1.049
0.705
1.049
0.714
1.049
0.655
1.049
0.640
1.049
0.641
1.049
0.501
1.049
0.575
1.049
0.446
1.049
0.684
0.892
0.698
0.892
0.501
0.892
0.512
0.892
0.846
0.892
0.862
0.892
0.705
0.892
0.714
0.892
0.655
0.892
0.641
0.892
0.501
0.892
0.575
0.892
0.446
0.892
0.625
1.049
0.489
1.049
0.561
1.049
0.640
0.892
0.625
0.892
0.489
0.892
0.561
0.892
0.610
0.887
0.457
0.887
0.624
0.887
0.468
0.887
0.657
1.000
Benefits
In
Addition
to EHBs
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
Tobacco
Surcharge
Adjustment
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
0.986
Administrative
Specific
Costs Excl.
Catastrophic AV Pricing
Exchange Fee
Eligibility
Value
1.236
1.002
0.876
1.236
1.002
0.894
1.236
1.002
0.642
1.236
1.002
0.656
1.236
1.002
1.084
1.236
1.002
1.104
1.236
1.002
0.903
1.236
1.002
0.915
1.236
1.002
0.840
1.236
1.002
0.821
1.236
1.002
0.821
1.236
1.002
0.642
1.236
1.002
0.736
1.236
0.902
0.514
1.236
1.002
0.745
1.236
1.002
0.760
1.236
1.002
0.546
1.236
1.002
0.558
1.236
1.002
0.922
1.236
1.002
0.939
1.236
1.002
0.767
1.236
1.002
0.778
1.236
1.002
0.714
1.236
1.002
0.698
1.236
1.002
0.546
1.236
1.002
0.626
1.236
0.902
0.437
1.236
1.002
0.801
1.236
1.002
0.626
1.236
1.002
0.719
1.236
1.002
0.697
1.236
1.002
0.681
1.236
1.002
0.532
1.236
1.002
0.611
1.236
1.002
0.661
1.236
1.002
0.495
1.236
1.002
0.676
1.236
1.002
0.507
1.236
1.000
0.801
The AV Pricing Value represents the cumulative effect of the adjustments made by BCBSKC to move from the Market
Adjusted Index Rate to the Plan Adjusted Index Rate.
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's
2013 Health Cost Guidelines . These adjustment factors only contain expected differences in utilization due to differences
in cost sharing and not due to health status.
_____________________________________________________________________
June 26,2014
29_

_____________________________________________________________________
EXHIBIT 20. MEMBERSHIP PROJECTIONS

The projected membership (as displayed in Worksheet 2, Section IV of the URRT) was determined by considering the
size of the projected Missouri individual market in 2015 in the plan's service area and an assumed penetration rate of
this 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
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 the
projected enrollment in each subsidy level, by plan.
Table 20.1
Projected Enrollment (Members) by Subsidy Level
87%
94%
Plan Name
73%
1,512
5,940
10,476
648
3,240
4,968
1,728
4,212
7,236
1,296
3,024
7,992
432
1,728
3,024
1,080
1,944
4,104
216
432
1,080
432
648
1,080
1,296
2,592
3,240
Total
8,640
23,760
43,200
Total
17,928
8,856
13,176
12,312
5,184
7,128
1,728
2,160
7,128
75,600
_____________________________________________________________________
June 26,2014
30_

_____________________________________________________________________
EXHIBIT 21. TERMINATED PRODUCTS

There are no products terminating prior to the effective date.
_____________________________________________________________________
June 26,2014
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.
_____________________________________________________________________
June 26,2014
32_

_____________________________________________________________________
EXHIBIT 23. WARNING ALERTS

The are no Warning Alerts on Worksheet 2.
_____________________________________________________________________
June 26,2014
33_

_____________________________________________________________________
EXHIBIT 24. EFFECTIVE RATE REVIEW INFORMATION (OPTIONAL)

Not applicable.
_____________________________________________________________________
June 26,2014
34_

_____________________________________________________________________
EXHIBIT 25. RELIANCE

I did not rely on any information or underlying assumptions provided by another individual.
_____________________________________________________________________
June 26,2014
35_

2015 Blue Cross and Blue Shield of Kansas City Individual-1 Rate Filing

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Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

Part III Actuarial Memorandum

Blue Cross and Blue Shield of Kansas City

One Pershing Square

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

Proposed Rate Increase(s)

Exp Premium and Claims

Credibility Man Rate Dev

Paid to Allowed Ratio

Risk Adj and Reinsurance

NBE, Profit, & Risk

Projected Loss Ratio

Single Risk Pool

Market Adj Index Rates

Plan Adj Index Rates

Cons Adj Prem Rate Dev

Eff Rate Review Info

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 1. GENERAL INFORMATION

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 2. PROPOSED RATE INCREASE(S)

Prospective Benefit Changes

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 2. PROPOSED RATE INCREASE(S)

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 2. PROPOSED RATE INCREASE(S)

Table 2.4 (cont.)

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 3. EXPERIENCE PREMIUM AND CLAIMS

Total Billed Allowed

Method for Determining Paid Claims

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 3. EXPERIENCE PREMIUM AND CLAIMS

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 4. BENEFIT CATEGORIES

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 5. PROJECTION FACTORS

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 5. PROJECTION FACTORS

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 5. PROJECTION FACTORS

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 6. CREDIBILITY MANUAL RATE DEVELOPMENT

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 7. CREDIBILITY OF EXPERIENCE

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 8. PAID TO ALLOWED RATIO

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 9. RISK ADJUSTMENT AND REINSURANCE

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 10. NON-BENEFIT EXPENSES AND PROFIT & RISK

Taxes and Fees

Applies to On Exchange members only

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 11. PROJECTED LOSS RATIO

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 12. SINGLE RISK POOL

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 13. INDEX RATE

Blue Cross and Blue Shield of Kansas City Actuarial Memorandum

EXHIBIT 14. MARKET ADJUSTED INDEX RATES

Net Risk Adjustment

Market Adjusted Index Rate