SERFF Tracking #: State Tracking #: Company Tracking ...€¦ · Project Name: Status of Filing in Domicile: Not Filed Project Number: Date Approved in Domicile: Requested Filing

Filing at a Glance

Company: Anthem Health Plans, Inc dba Anthem Blue Cross and Blue Shield of Connecticut

Product Name: Individual 2020

State: Connecticut

TOI: HOrg02I Individual Health Organizations - Health Maintenance (HMO)

Sub-TOI: HOrg02I.005D Individual - HMO

Filing Type: Rate

Date Submitted: 07/08/2019

SERFF Tr Num: AWLP-131988460

SERFF Status: Closed-Reduced - Approved

State Tr Num: 201904057

State Status:

Co Tr Num:

ImplementationDate Requested:

01/01/2020

Author(s): Tu Nguyen, Mary McCarthy, Jeremy Chernofsky, Kristin Roberts, Austin Lederman

Reviewer(s): Paul Lombardo (primary), Tricia Dave

Disposition Date: 09/12/2019

Disposition Status: Reduced - Approved

Implementation Date:

State Filing Description:

SERFF Tracking #: AWLP-131988460 State Tracking #: 201904057 Company Tracking #:

State: Connecticut Filing Company: Anthem Health Plans, Inc dba Anthem Blue Crossand Blue Shield of Connecticut

TOI/Sub-TOI: HOrg02I Individual Health Organizations - Health Maintenance (HMO)/HOrg02I.005D Individual - HMO


Project Name/Number: /

PDF Pipeline for SERFF Tracking Number AWLP-131988460 Generated 09/13/2019 10:09 AM

General Information

Project Name: Status of Filing in Domicile: Not Filed

Project Number: Date Approved in Domicile:

Requested Filing Mode: Review & Approval Domicile Status Comments:

Explanation for Combination/Other: Market Type: Individual

Submission Type: New Submission Individual Market Type:

Overall Rate Impact: 15.2% Filing Status Changed: 09/13/2019

State Status Changed:

Deemer Date: Created By: Kristin Roberts

Submitted By: Kristin Roberts Corresponding Filing Tracking Number:

Filing Description:

July 8, 2019

Mr. Paul Lombardo, ASA, MAAAActuary, Life & Health DivisionState of Connecticut Insurance DepartmentP.O. Box 816Hartford, CT 06142-0816

Re: Anthem BCBS 2020 Individual Rate FilingSERFF Tracking Number AWLP-131988460

Dear Mr. Lombardo:

For your approval, Anthem Blue Cross and Blue Shield (ABCBS) is submitting proposed premium rates for its new andrenewing Individual Products for both On & Off the Connecticut Exchange, effective January 1, 2020. The following policyforms are affected by the requested rate change.

CT ON HIX HMO (1-20)CT OFF HIX HMO (1-20)CT ON HIX PPO (1-20)CT OFF HIX PPO (1-20)

Please see the enclosed files for the scope of changes and the supporting documents:

•Anthem Individual State - Actuarial Memorandum•Anthem 2020 Actuarial Certification•Anthem 2020 FMHP Test•Anthem Individual Federal – Actuarial Memorandum•Anthem 2020 Unified Rate Review Template•Unique Plan Design Supporting Documentation•Actuarial Value Screenshot for each Individual Plan•Anthem 2020 Rates Template•Anthem 2020 Schedule of Benefits







Company and Contact

Filing Fees

State Specific

All Individual products include pediatric dental benefits embedded in the benefits. The Individual Rates are developed from the2018 Individual ACA experience and this same experience data is used for the Claim Lag Triangle exhibit.

This filing includes the impact of the actual 2018 risk adjustment based on the report produced by CMS and released on June28, 2019.

Thank you for your attention to this filing. If you have any questions regarding this matter, please feel free to contact me at 203677-8510. You may also email me at [email protected].

Sincerely,

Tu Nguyen, FSA, MAAADirector & Actuary III

Attachments

Filing Contact InformationTu Nguyen, Director & Actuary III [email protected]

108 Leigus Road

Wallingford, CT 06492

203-677-8510 [Phone]

Filing Company InformationAnthem Health Plans, Inc dbaAnthem Blue Cross and BlueShield of Connecticut

108 Leigus Road

Wallingford, CT 06492

(203) 677-4000 ext. [Phone]

CoCode: 60217

Group Code: 671

Group Name: WellPoint Inc Group

FEIN Number: 06-1475928

State of Domicile: Connecticut

Company Type: Life,Accident, Health

State ID Number:

Fee Required? No

Retaliatory? No

Fee Explanation:

Individual, Small group and non-employer group health filings require rates to be filed. Does this filing comply with therequirements of item 17 of the general instructions?: YesA number of long standing Department positions have been reviewed and modified. As a result, some checklists have beenamended, for your convenience we have summarized all of these modifications under General Instructions entitled "AmendedDepartment Positions", have you reviewed this attachment at the bottom of the General Instructions?: Yes







Correspondence Summary DispositionsStatus Created By Created On Date SubmittedReduced -Approved

Tricia Dave 09/12/2019 09/13/2019

Objection Letters and Response LettersObjection Letters Response Letters

Status Created By Created On Date Submitted Responded By Created On Date SubmittedChangeRequest

Tricia Dave 09/04/2019 09/04/2019 Kristin Roberts 09/09/2019 09/09/2019

RequestingAdditionalInformation

Tricia Dave 07/24/2019 07/24/2019 Kristin Roberts 07/31/2019 07/31/2019

Filing NotesSubject Note Type Created By Created On Date SubmittedAnthem response to CID questions on 7/24/19 Note To Reviewer Kristin Roberts 07/31/2019 07/31/2019


State: Connecticut Filing Company: Anthem Health Plans, Inc dba Anthem Blue Cross and Blue Shieldof Connecticut





Disposition

Disposition Date: 09/12/2019

Implementation Date:

Status: Reduced - Approved

Comment: See attached disposition file.

Company

Name:

Overall %

Indicated

Change:

Overall %

Rate

Impact:

Written Premium

Change for

this Program:

Number of Policy

Holders Affected

for this Program:

Written

Premium for

this Program:

Maximum %

Change

(where req'd):

Minimum %

Change

(where req'd):Anthem Health Plans, Incdba Anthem Blue Crossand Blue Shield ofConnecticut

15.200% 15.200% $45,881,364 21,892 $307,035,360 25.700% 0.100%

Schedule Schedule Item Schedule Item Status Public AccessSupporting Document (revised) Actuarial Memorandum NoSupporting Document Actuarial Memorandum YesSupporting Document Consumer Disclosure Form YesSupporting Document (revised) Actuarial Memorandum and Certifications YesSupporting Document Actuarial Memorandum and Certifications YesSupporting Document (revised) Unified Rate Review Template YesSupporting Document Unified Rate Review Template YesSupporting Document Unique Plan Justifications YesSupporting Document AV Screenshots YesSupporting Document (revised) Rate Template NoSupporting Document Rate Template YesSupporting Document Summary of Benefits YesRate (revised) Actuarial memorandum Exhibit A NoRate Actuarial memorandum Exhibit A Yes







STATE OF CONNECTICUT

INSURANCE DEPARTMENT

www.ct.gov/cid

P.O. Box 816 Hartford, CT 06142-0816

An Equal Opportunity Employer

Anthem Health Plan Individual 2020

Finding of Facts

1. This is a rate filing for the Individual market ACA-compliant plans offered by Anthem Health Plans, Inc., also referred to as Anthem.

2. The proposed rates in this filing will be effective for the 2020 plan year beginning January 1, 2020, and apply to plans both On-Exchange and Off-Exchange.

3. Policy forms in this rate filing are as follows:

Form Number

CT ON HIX HMO (1/20)

CT OFF HIX HMO (1/20)

CT ON HIX PPO (1/20)

CT OFF HIX PPO (1/20)

4. The proposed annual rate changes by plan from 0.1% to 25.7%. These ranges are based on the renewing plans, and are consistent with what's reported in the

Unified Rate Review Template.

5. Factors that affect the rate changes for all plans include:

Morbidity: There are anticipated changes in the market-wide morbidity of the covered population in the projection period.

Trend: This includes the impact of inflation, provider contracting changes, and changes in utilization of services.

Benefit modifications, including changes made to comply with updated AV requirements.

Changes in taxes, fees, and some non-benefit expenses, including the reinstatement of Health Insurer Tax in 2020.

6. Although rates are based on the same claims experience, the rate changes vary by plan due to the following factors:

Changes in benefit design that vary by plan.

Updates in benefit relativity factors among plans.

Updated adjustment factors for catastrophic plans.

Changes in some non-benefit expenses that are applied on a PMPM basis.

Changes in the claim cost relativity by area.

7. The experience period premium and claims reported in Worksheet 1, Section I of the Unified Rate Review Template (URRT) are for the non-grandfathered, single

risk pool compliant policies of the identified legal entity in the Individual market.

8. The experience reported reflects the incurred claims from January 1, 2018 through December 31, 2018 based on claims paid through March 31, 2019.

9. The preliminary MLR rebate estimate is $0, which is consistent with Anthem's December 31, 2018 general ledger estimate allocated to the non-grandfathered

portion of Individual business.

10. The allowed claims are determined by subtracting non-covered benefits, provider discounts, and coordination of benefits amounts from the billed amount. Allowed

and incurred claims are completed using the chain ladder method, an industry

standard, by using historic paid vs. incurred claims patterns. The method

calculates historic completion percentages, representing the percent of cumulative

claims paid of the ultimate incurred amounts for each lag month. Claim backlog

files are reviewed on a monthly basis and are accounted for in the historical

completion factor estimates.

11. The annual pricing trend used in the development of the rates is 9.3%. This annual pricing trend is applied to both years 1 and 2 in Worksheet 1 of the URRT. 12.0

months of trend is applied to Year 1 and 12.2 years of trend to Year 2. The trend

is developed by normalizing historical benefit expense for changes in the

underlying population and known cost drivers, which is then projected forward to

develop the pricing trend. Examples of such changes include contracting, cost of

care initiatives, workdays, average wholesale price, and expected introduction of

generic drugs. For projection, the experience period claims are trended 24.2

months from the midpoint of the experience period, which is June 26, 2018, to the

midpoint of the projection period, which is July 1, 2020.

12. Morbidity Adjustment:

Adjustments are made to account for the differences between the average morbidity of the experience period population and that of the anticipated

population in the projection period.

The projected population consists of expected retention of existing policies and new sales. The new sales include the previously uninsured population and

previously insured populations from other carriers or coverage. The morbidity

adjustment reflects projected Anthem and market changes in morbidity. Prior

experience has exhibited market shrinkage and morbidity increases year over

year. With anticipated growing market volatility, the expectation is that

selective lapse and market deterioration will continue in 2020 due to increased

selective entry and exit as members make health care decisions in the

guaranteed issued, community rated ACA marketplace.

13. Changes in benefits include the following items:

Rx Adjustments: Adjustments are made to reflect differences in the Rx formulary, Rx networks and discounts, and mail order programs between the

experience period and the projection period.

Network Adjustments: Adjustments are made to account for the member cost sharing change for Out-of-Network benefits between the experience period

and the projection period for some plans.

14. Changes in Demographics (Normalization): The experience period claims are normalized to reflect anticipated changes in age/gender, area, network, and

benefit plan in the projection period:

Age/Gender: The assumed claims cost is applied by age and gender to the experience period membership distribution and the projection period

membership distribution.

Area/Network: The area claims factors are developed based on an analysis of allowed claims by network, mapped to the prescribed rating areas using the

group’s 5-digit zip code.

Benefit Plan: The experience period claims are normalized to reflect the average benefit level in the projection period using benefit relativities. The

benefit relativities include the value of cost shares and anticipated changes in

utilization due to the difference in average cost share requirements.

15. Other Adjustments:

Grace Period: The claims experience has been adjusted to account for incidences of enrollees not paying premiums due during the first month of the

90-day grace period when the QHP is liable for paying claims.

Change in Medical Management: This adjustment reflects the medical management impact not already included in the claims experience and trend.

Induced demand Due to Cost Share Reductions: Individuals who fall below 250% of the federal Poverty Level and enroll in On-Exchange silver plans will

be eligible for cost share reductions. The percentage of enrollment in CSR

Plans in the experience period is compared to that of the projection period to

adjust for the different induced demand level due to CSR between the two

periods.

Rx Rebates: The projected claims cost is adjusted to reflect anticipated Rx rebates. These projections take into account the most up-to-date information

regarding anticipated rebate contracts, drug prices, anticipated price inflation,

and upcoming patent expirations.

Projected cost of pediatric dental and vision benefits are included.

Benefits in excess of the essential health benefits in the projection period are included. Exhibit F provides details of additional non-EHB benefits.

As an initiative to provide affordable coverage, Anthem performed an analysis to identify low quality and high cost inefficient providers, and removed them

from our network. The rate development reflects 1.7% savings for this

initiative.

16. The experience period claims are 100% credible based on the credibility method used. Based on analysis of historical data, the standard for fully credible

experience is 10,500 members. With 38,281 members, the credibility level

assigned to the experience period claims is 100%. Therefore, a manual rate was

not used in the rate development.

17. Experience period risk adjustments are based on the 2018 CMS report published June 28, 2019.

18. The projected risk adjustment PMPMs reported in the URRT are on a paid claim basis. The projected amount applied to the development of Market Adjusted Index

Rate is on an allowed claim basis. Exhibit C and Exhibit G provide details.

19. Experience for all individual policy forms in this filing:

Premium Incurred Claims

CY PMPM PMPM Loss Ratio

2013 $339.84 $302.92 89.1%

2014 $438.77 $307.98 70.2%

2015 $482.18 $396.04 82.1%

2016 $486.46 $468.17 96.2%

2017 $564.14 $515.50 91.4%

2018 $698.04 $531.72 76.2%

20. Trend Historical Exhibit

Rating Trend

Anthem proposes a 9.3% rating trend. The rating trend is developed from the expected paid trend.

Observed Paid Trends

Observed trends have been normalized to remove the impact of aging and morbidity, shifts in gender, mandates, and impact of medical benefit changes.

Benefit Buy Downs

Cost and utilization data in the experience periods includes the impact of benefit buy-downs. The trend process is

normalized for benefit buy-down to develop a projected trend for 2017, 2018, and 2019.

Leveraging

The use of Paid Claims removes the need to adjust for Leveraging.

Other Trend Components

Medical technology trend is included in observed experience and is not an independent assumption.

(1) (2) (3) (2)/(1) (3)/(2)

Trend Trend

2016 2017 2018 2017 2018

Member Months 619,923 597,297 459,703

Utilization/1000

Inpatient 355.9 389.7 363.9 9.5% -6.6%

Outpatient 4,454.3 4,432.8 4,417.6 -0.5% -0.3%

Professional 9,460.1 9,622.6 9,923.7 1.7% 3.1%

Medical SubTotal 14,270.2 14,445.0 14,705.2 1.2% 1.8%

Pharmacy 13,095.8 13,464.0 13,615.9 2.8% 1.1%

Total 27,366.0 27,909.1 28,321.2 2.0% 1.5%

Unit Cost

Inpatient 4,137.9 4,340.3 4,832.8 4.9% 11.3%

Outpatient 531.0 556.4 632.4 4.8% 13.7%

Professional 188.6 200.3 207.1 6.2% 3.4%

Medical SubTotal 393.9 421.3 449.4 6.9% 6.7%

Pharmacy 128.2 132.6 141.8 3.4% 6.9%

Total 266.8 282.0 301.5 5.7% 6.9%

Allowed PMPM

Inpatient 122.7 140.9 146.6 14.9% 4.0%

Outpatient 197.1 205.5 232.8 4.3% 13.3%

Professional 148.7 160.6 171.3 8.0% 6.6%


Pharmacy 139.9 148.8 160.8 6.3% 8.1%

Total 608.4 655.9 711.5 7.8% 8.5%

Paid PMPM

Inpatient 116.4 133.4 138.0 14.6% 3.5%

Outpatient 163.8 165.2 181.3 0.9% 9.7%

Professional 104.6 110.0 116.2 5.1% 5.6%


Pharmacy 121.2 127.7 138.4 5.3% 8.4%

Total 506.0 536.3 574.0 6.0% 7.0%

2016 2017 2018 2019

Paid Thru 4/30 (PMPM) 516.4 536.5 553.0 592.9

Paid Thru Trend 3.9% 3.1% 7.2%

21. The proposed retention charge in the rate development is 19.4%. This is comprised of both fixed and variable expenses and includes selling expense,

administrative expense, federal fees, federal income tax, exchange fees and risk

and net profit margin. The December 31, 2018 Annual Statement for Anthem

Health Plans, Inc. has a retention amount of 21.4%. This amount is calculated

from the Analysis of Operations by Lines of Business exhibit on page 7: 1 – [line

17, column 2 $797,384,558 / line 7, column 2 $1,015,000,670] = 21.4%.

22. Exchange User Fee: The expected charge is estimated at 1.65% of premium. The resulting fee/percentage is applied evenly to all plans in the risk pool, both On and

Off Exchange.

23. Premium taxes, federal income taxes, and state income taxes are also included.

24. Profit & risk margin is reflected on a post-tax basis as a percentage of premium.

25. Exhibit I shows the projected Federal MLR for the products in this filing. The calculation is an estimate and is not meant to be a true measure for Federal or

State MLR rebate purposes. The products in this filing represent only a subset of

Anthem's Individual business. The MLR for Anthem's entire book of Individual

business will be compared to the minimum Federal benchmark for purposes of

determining regulation-related premium refunds. Also note that the projected

Federal MLR presented here does not capture all adjustments, including but not

limited to: three-year averaging, credibility, dual option, and deductible. Anthem's

projected MLR is expected to meet or exceed the minimum MLR standards at the

market level after including all adjustments. The estimated Federal MLR is

87.83%.

26. The 2020 Individual plan portfolio contains six plans with tiered in-network benefits. These plans have up to three networks of provider care and different cost

share provisions for each network:

The Tier 1 network is a subset of preferred in-network providers; members have the lowest cost share amounts when utilizing this preferred network.

The Tier 2 network is comprised of the remaining in-network providers and has higher cost share amounts compared to the Tier 1 network.

For tiered PPO plans, the Tier 3 network is comprised of the out-of-network providers and has the highest cost share amounts.

Additional cost of care savings are expected from increased utilization and new providers contracting of Tier 1 providers. These savings are used to

reduce the tiered plan rate compared to a non-tiered plan with similar cost

share provisions.

27. The RBC Ratio for Anthem Health Plans, Inc. is 462.6% as of 12/31/2018. Current capital and surplus for Anthem Health Plans, Inc. is $360,256,649.

28. The Department received 1 public comment requesting that the rate increase be disapproved and received 4 public comments regarding all of the ACA filings

generally.

Department Summary

Since this filing reflects rates that incorporate all the new rating requirements of PPACA

effective 1/1/2014, the Department used criteria spelled out in the latest HHS rate

regulations as a template for review along with previously issued CT Insurance

Department bulletins that discuss the requirements for rate filings.

The Department reviewed the 9.3% annual trend for 24.2 months assumption used in the

rate filing and believes that based upon the experience data submitted this assumption is

excessive and should be reduced to 7.75% for 24 months.

The Department reviewed the June 2019 CCIIO Summary Report on Permanent Risk

Adjustment transfers for the 2018 Benefit year report for Connecticut, as well as the

August 2019 Report with Risk adjustment Data Verification (RADV) adjustments. Based

on these reports Anthem received $6,208,972 ($13.52 pmpm) in risk adjustment

payments for the individual market, with a 2018 RADV payment adjustment of $61,573

($0.13 pmpm) also determined. In addition, a significant net amount of $3.90 pmpm

($5.27 minus the cost of $1.37) was received from the High Risk Pool, for a total 2018

receipt of $17.29 pmpm. The Department believes the risk adjustment receipt of $13.52

pmpm, built into this rate filing should be changed to a receipt of $17.29 pmpm for 2020.

Anthem assumed a .2% Grace Period adjustment. The Department does not believe this is

necessary and is requiring it be removed.

The Department reviewed the Dental and Vision assumptions and justification data

provided and believes the assumptions are excessive and should be reduced from

$2.65/$0.23 pmpm for Dental/Vision to $1.09/$0.07 pmpm.

The Department reviewed the Rx Rebate assumption of $12.86 pmpm in Exhibit C and

believes it is insufficient and should be equal to $16.16 pmpm.

The Department reviewed the proposed area factor change and evidence to support the

change and is requiring Anthem to stay at the 2019 area factor levels. The Department

was not comfortable that the MLR analysis provided as justification did not include

differences for population morbidity by geographic area.

Anthem assumed a morbidity deterioration factor of 4.7%. Based on the Departments

review of the data provided and the Department’s assessment of expected deterioration in

the overall market, the Department believes this factor is excessive and should be reduced

to 1.0%.

Based upon the federal MLR for this filing of 87.83% the Department believes that the

proposed pricing supports the federally required 80% loss ratio for individual business.

Department Disposition

Based upon the finding of fact, and the summary information described above, the

proposed average rate increase of 15.2%, with a range from 0.1% to 25.7% is found to be

excessive and is disapproved as submitted.

As a result, the final approved average increase is 6.5% with a range from -7.3% to

16.7%.

The approved rates, with the required changes implemented, are reasonable in

relationship to the benefits being provided, and are neither excessive, nor inadequate nor

unfairly discriminatory.

Dated September 13, 2019.

_______________________________

Tricia Davé, F.S.A., M.A.A.A.

Insurance Actuary

Objection Letter Objection Letter Status Change Request

Objection Letter Date 09/04/2019

Submitted Date 09/04/2019

Respond By Date 09/09/2019

Dear Tu Nguyen,

Introduction: See attached file

Conclusion:

Sincerely,

Tricia Dave







Based upon the Departments findings, please make the following changes and submit a complete

revised filing for review with all updated exhibits and rates, including a clear indication of the final

approved average rate increase and range if applicable, no later than Monday, September 9, 2019:

1) Revise the proposed annual trend from 9.3% to 7.75%.

2) Revise the period that trend is applied to from 24.2 months to 24 months.

3) Revise the morbidity adjustment from 4.7% to 1.0%.

4) Revise the Rx Rebate from $12.86 to $16.16.

5) Revise the Risk adjustment receipt from $13.52 to $17.29.

6) Revise the Pediatric Dental/Vision Claim adjustments from $2.65/$0.23 PMPM to $1.09/$.07 PMPM.

7) Remove the Grace Period adjustment.

8) The proposed area factor changes for 2020 are not allowed, please maintain current 2019 area

factors for all counties.

This correspondence will be held confidential, we request that the company’s response to this change

request be marked confidential, not for public access. The Department will send official dispositions to

each carrier with a more detailed explanation and will post all final filings simultaneously.

Objection Letter Objection Letter Status Requesting Additional Information

Objection Letter Date 07/24/2019


Respond By Date 07/31/2019

Dear Tu Nguyen,

Introduction: Upon review of this Filing, we had some additional questions. Please see the attached document for a summary.Thanks, in advance, for your response on or before July 31, 2019.Tricia Dave, FSA, MAAA

Conclusion:

Sincerely,

Tricia Dave







Anthem

2019 Individual Rate Filing

Questions/Comments

1. How come the experience period member months in the URRT (459,312) don’t match

the member months in Exhibit B and Exhibit S (459,373)?

2. The filing states that there has been market shrinkage. Please provide data to support

this assertion for the individual market.

3. The morbidity change factor has been estimated at 1.047. Please provide a detailed

pmpm claim analysis supporting this morbidity deterioration assumption from year to

year.

4. Provide detailed data to support the experience period and future population factors for

each category in Exhibit D.

5. How does the Network adjustment under Plan Design changes in Exhibit E differ from

Area/Network normalization in Exhibit D?

6. As described on page 4, Other Adjustments includes Change in Medical Management,

yet there doesn’t appear to be any adjustments in Exhibit C, please explain.

7. Isn’t pediatric dental and vision (from Exhibit F) included in Exhibit B experience and

therefore already included in the starting paid claims in Exhibit C? If not, explain why

they aren’t and provide historical pmpm experience for each separately.

8. Provide a detailed actuarial analysis that supports the 1.7% savings developed for the

Provider Scoping Initiative impact.

9. On page 7, under the Projected Loss Ratio, it states that the products in this filing

represent only a subset of Anthem’s individual business. What other individual business

does Anthem have in Connecticut that is applicable to the federal MLR calculation and is

not included in this filing?

10. Provide a detailed actuarial analysis that supports the revised 2020 area rating factors

contained in Exhibit M, including claim pmpm data by county, to explain the proposed

area factors.

11. Could not locate the explicit CSR Silver load in the filing, please provide along with a

detailed actuarial analysis of all assumptions and the development of the actual factor.

Response Letter Response Letter Status Submitted to State

Response Letter Date 09/09/2019


Dear Paul Lombardo,

Introduction:

Response 1

Comments: For your approval, Anthem Blue Cross and Blue Shield (ABCBS) is submitting proposed premium rates for its Individual Products effective January 1, 2020 based onupdated changes per your guidance on 09/04/2019. This results in an overall increase of 6.5%.

Please see the supporting documents:

Anthem Exhibit A Anthem Individual State - Actuarial Memorandum Redline Anthem Individual State - Actuarial Memorandum Anthem Individual Federal Actuarial Memorandum Anthem 2020 Unified Rate Review Template Anthem 2020 Rates Template

Thank you for your attention to this filing. If you have any questions regarding this matter, please feel free to contact me at 203-677-8510. You may also email me [email protected] .

Sincerely,

Tu Nguyen, FSA, MAAADirector and Actuary III

Changed Items:







Supporting Document Schedule Item ChangesSatisfied - Item: Actuarial MemorandumComments:

Attachment(s): 2020 Actuarial Memorandum_CT IND - G1800-State_20190909.pdf2020 Actuarial Memorandum_CT IND - G1800-State_20190909 Redlined.pdfPrevious VersionSatisfied - Item: Actuarial MemorandumComments:Attachment(s): 2020 Actuarial Memorandum_CT IND - G1800-State_20190708.pdf



Satisfied - Item: Actuarial Memorandum and CertificationsComments:

Attachment(s):CT Anthem Individual 2020 MHP Test 20190708.pdfAnthem Actuarial Certification.pdf2020 Actuarial Memorandum_CT IND - G1800-Federal_20190909.pdf

Previous VersionSatisfied - Item: Actuarial Memorandum and CertificationsComments:














Satisfied - Item: Unified Rate Review TemplateComments:Attachment(s): URRT-CT-IND-86545-1Q20 -Submission-2019-09-09.pdfPrevious VersionSatisfied - Item: Unified Rate Review TemplateComments:Attachment(s): URRT-CT-IND-86545-1Q20 -Submission-2019-07-08.pdf













Satisfied - Item: Unified Rate Review TemplateComments:Attachment(s): URRT-CT-IND-86545-1Q20 -Submission-2019-09-09.pdfPrevious VersionSatisfied - Item: Unified Rate Review TemplateComments:Attachment(s): URRT-CT-IND-86545-1Q20 -Submission-2019-07-08.pdf

Satisfied - Item: Rate TemplateComments:Attachment(s): 1Q20_CT_86545_IND_On-Off_All-Plans_RateTables 20190909.pdfPrevious VersionSatisfied - Item: Rate Template







Comments:Attachment(s): 1Q20_CT_86545_IND_On-Off_All-Plans_RateTables_07082019.pdf

No Form Schedule items changed.

Rate/Rule Schedule Item Changes

Item

No. Document Name

Affected Form

Numbers

(Separated with

commas)

Rate Action Rate Action

Information

Attachments Date Submitted

1 Actuarial memorandumExhibit A

CT ON HIX HMO (1-20), CT OFF HIX HMO(1-20), CT ON HIXPPO (1-20), CT OFFHIX PPO (1-20)

Revised Previous State FilingNumber:201803932Percent Rate ChangeRequest:6.5

Exhibit A 2020_CT IND- G1800-20190909.pdf,

09/09/2019By: Kristin Roberts

Previous Version1 Actuarial memorandum

Exhibit ACT ON HIX HMO (1-20), CT OFF HIX HMO(1-20), CT ON HIXPPO (1-20), CT OFFHIX PPO (1-20)

Revised Previous State FilingNumber:201803932Percent Rate ChangeRequest:15.2


07/08/2019By: Kristin Roberts

Conclusion:

Sincerely,

Kristin Roberts







Response Letter Response Letter Status Submitted to State

Response Letter Date 07/31/2019


Dear Paul Lombardo,

Introduction: Please see Anthem response to the CID questions from 7/24/19 in a Note to reviewer

Response 1

Comments: Please see note to reviewer dated 7/31/2019.

Changed Items:

No Supporting Documents changed.

No Form Schedule items changed.

No Rate/Rule Schedule items changed.

Conclusion:

Sincerely,

Kristin Roberts







Note To Reviewer

Created By:

Kristin Roberts on 07/31/2019 03:23 PM

Last Edited By:

Paul Lombardo

Submitted On:

08/06/2019 01:08 PM

Subject:

Anthem response to CID questions on 7/24/19

Comments:

Please see the attached document in response to the questions for Individual on 7/24/19.







Anthem Health Plans Individual 2020

SERFF Tracking AWLP‐131988460

1. How come the experience period member months in the URRT (459,312) don’t match the member months in Exhibit B and Exhibit S (459,373)?

The URRT sums membership by HIOS ID. Some members of the experience period are in the data without a HIOS ID, but we believe they belong in the experience data. In those cases, those members (i.e., 5 members) would not be included within the URRT.

2. The filing states that there has been market shrinkage. Please provide data to support

this assertion for the individual market.

The above chart is from the NAIC Quarterly Financial Statement Exhibits for the Individual Market Enrollment. The exhibit shows how the size of the market has decreased 13.8% from 2017 to 2018 and then an additional decrease of 9.2% from 2018 to 2019. We expect the membership to shrink further by the end of 2019.

3. The morbidity change factor has been estimated at 1.047. Please provide a detailed

pmpm claim analysis supporting this morbidity deterioration assumption from year to year. The market contraction component of the morbidity adjustment factor estimates the claims impact due to continued selective drop of coverage, assuming that individuals with greater healthcare needs will be more likely to retain coverage in a guaranteed issue market in which premium levels continue to increase. We expect this trend to continue in part due to the elimination of the individual mandate penalty and potential movement into other markets. We estimated lapse rates by APTC eligibility, Cost‐Share‐Reduction (CSR) eligibility, and risk score cohorts weighing to an overall market lapse rate of 4.4% per year in 2019 and 2020. The selection of the overall lapse rate was guided by historical market enrollment data points with adjustments for lesser future disruption. The estimated lapse rates by APTC eligibility, CSR eligibility, and risk score cohorts were guided by the following assumptions: 1) Individuals with lower healthcare needs will lapse at higher rates than

CT Members Yr to Yr chng1Q17 153,729 1Q18 132,462 ‐13.8%1Q19 120,226 ‐9.2%

those with higher healthcare needs. 2) Rate increase impacts to premium non‐subsidy members are higher than premium subsidy members, causing non‐subsidy members to lapse at higher rates. The assumed lapse rates show this pattern. Lastly, pre‐lapse membership distributions were calibrated to approximate the 2018 CT market, so as to estimate the claims cost change at a market‐level, where the impact to Risk Adjustment transfers among carriers is neutral.

4. Provide detailed data to support the experience period and future population factors for each category in Exhibit D.

Age/Gender: Based on 2018 Individual ACA experience data, the member‐weighted age

factor was 1.002. Based on 2020 rating period membership distribution of members by age, the assumed member‐weighted age factor is 1.015. The projected 2020 membership is based off of early 2019 Individual ACA membership, which reflects that the average age is slightly older than 2018. The projected 2020 membership reflects a slight increase in members in the older age cohort and a slight decrease in membership proportion in the younger age cohort. The Age/Gender Normalization Factor = 1.015/1.002 = 1.013.

Area/Network: Based on 2018 Individual ACA experience data, the member‐weighted area/network factor was 1.006. Based on Networks that will be offered in 2020, the member‐weighted area/network factor is 1.008. The Networks offered in 2020 are leaner with a focus on Pathway X and Tiered Networks, resulting in a lower factor for the future projection population as compared to the experience period population. The Area/Network Normalization Factor = 1.008/1.006 = 1.002

201812 Snapshot Market EXPERIENCE BASE TABLECharacteristics

Membership EstimatedPercentile Risk Subsidy CSR Distribution Claims PMPM

0%‐75% APTC CSR 19.2% 203.48$ 75%‐95% APTC CSR 5.9% 1,057.93$

95%+ APTC CSR 1.5% 3,868.88$ 0%‐75% APTC Non‐CSR 17.3% 223.16$ 75%‐95% APTC Non‐CSR 3.6% 1,030.93$

95%+ APTC Non‐CSR 0.8% 4,218.63$ 0%‐75% Non APTC Non‐CSR 40.1% 186.55$ 75%‐95% Non APTC Non‐CSR 9.8% 1,025.11$

95%+ Non APTC Non‐CSR 2.0% 4,154.64$ Total APTC 48.1% 555.33$

Total nonAPTC 51.9% 495.24$ Total 100.0% 524.16$

Benefit Plan: Based on 2018 Individual ACA experience data, the member‐weighted benefit relativity factor was 0.693. Based on projected 2020 Individual ACA membership and the new plans we are offering, the member‐weighted benefit relativity factor is .675. The 2020 Individual portfolio of plans includes leaner plan options than 2018, and it is expected that membership will shift towards leaner plan designs, lowering the average benefit relativity factor in 2020. The Benefit Plan Normalization Factor = .676/.693 = .975.

5. How does the Network adjustment under Plan Design changes in Exhibit E differ from Area/Network normalization in Exhibit D?

The Network adjustment under Plan Design changes in Exhibit E represents the weighted average change in Out of Network claims adjustments. The Area/Network normalization in Exhibit D reflects the forecasted change in paid claims PMPM from the experience period to the rating period due to forecasted changes in distribution of membership by rating area/network and network contracting.

6. As described on page 4, Other Adjustments includes Change in Medical Management, yet there doesn’t appear to be any adjustments in Exhibit C, please explain. Change in Medical Management was mentioned on page 4 because we considered whether any changes could have an impact to the rates. We determined that there was no impact and, therefore, we did not build any dollar impact into the rates and there was nothing to list on Exhibit C.

7. Isn’t pediatric dental and vision (from Exhibit F) included in Exhibit B experience and therefore already included in the starting paid claims in Exhibit C? If not, explain why they aren’t and provide historical pmpm experience for each separately. Pediatric dental/vision is not in our starting base claims experience because those claims are processed on a different claims system than the medical claims. Accordingly, cost estimates for pediatric dental and vision are added separately into our rate development. $2.65 PMPM for dental and $0.23 PMPM for vision.

Per your request, the table below shows dental and vision claim pmpm experience by year from 2016 through 2018.

In light of the minimal impact that this benefit cost assumption has on total premium compared to more material and volatile assumptions, Anthem has been trending the pediatric dental and vision cost assumptions from prior filings for the past several years,

Year Dental Vision2016 1.08$ 0.06$ 2017 1.22$ 0.09$ 2018 0.96$ 0.07$

and has not performed a study to reset the cost assumptions. We will study and revise the cost assumptions accordingly in future rate filings.

8. Provide a detailed actuarial analysis that supports the 1.7% savings developed for the Provider Scoping Initiative impact. Anthem performed an analysis to identify low quality and inefficient providers, and those providers were sculpted from our network to deliver the greatest value to our customers while ensuring compliance with network adequacy standards The average cost per episode of the providers who will be sculpted from the 2020 network is 36.5% higher than the average cost per episode of the providers participating in the 2020 network. Roughly 4.7% of the episodes will be impacted by our network modification, resulting in 1.7% savings (36.5% x 4.7%).

9. On page 7, under the Projected Loss Ratio, it states that the products in this filing

represent only a subset of Anthem’s individual business. What other individual business does Anthem have in Connecticut that is applicable to the federal MLR calculation and is not included in this filing?

This statement could apply for Temp products or to companies that have grandmother or grandfather business. This is not applicable for CT.

10. Provide a detailed actuarial analysis that supports the revised 2020 area rating factors

contained in Exhibit M, including claim pmpm data by county, to explain the proposed area factors. The proposed changes to the area factors was based on year‐to‐date medical loss ratio (YTD MLR) after adjusting for risk adjustment transfer payment. Below is a table showing YTD Risk‐ Adjusted MLR for each rating area compares to the overall YTD MLR. Negative means the YTD MLR for the county is running below the average overall YTD MLR. Anthem proposes to lower the area factors for Hartford, Middlesex, New Haven, Tolland and Windham as well as increasing the area factors for Litchfield and New London.

Region Name

2020 Area Rating Factor

2019 Area Rating Factor Change

RA LR Difference (Region ‐ Overall)

Fairfield 1.1 1.1 0.00 0.3% Hartford 0.94 0.96 ‐0.02 ‐5.7% Litchfield 0.94 0.93 0.01 5.5% Middlesex 1.01 1.03 ‐0.02 ‐3.1% New Haven 1.01 1.03 ‐0.02 ‐5.3% New London 0.96 0.93 0.03 8.9% Tolland 0.92 0.93 ‐0.01 ‐5.7% Windham 0.92 0.93 ‐0.01 ‐2.0%

11. Could not locate the explicit CSR Silver load in the filing, please provide along with a

detailed actuarial analysis of all assumptions and the development of the actual factor.

The starting claims costs initially assume the CSRs are spread out among all the plans. The process in the next paragraph explains how those costs are shifted from the non‐CSR plans to the CSR plans. Since the requirement is to rate plans starting from aggregate claims which include CSR claims, we estimate how much of those claims qualify as CSR claims and apply it only to the On Exchange Silver plan and remove the costs of CSRs from the non‐loaded plans.

First, we determine how much of our aggregate projected claims is from CSRs. To do this, we calculate the aggregate benefit relativity using only non‐CSR benefit relativities and compare to the actual projected aggregate benefit relativity, which includes the CSR variant BRs and assumed membership distributions across those variants. The difference between the BRs with and without CSRs is converted to a percentage of total projected claims, and all non‐loaded plans are reduced by that percentage. Whatever is needed to get us to the aggregate total projected claims including CSRs is then added to the loaded plans.

All non‐loaded plans were reduced by 4.6% and the Silver On‐Exchange plan was loaded by 9.5%.

Rate Information Rate data applies to filing.

Filing Method: Review & Approval

Rate Change Type: Increase

Overall Percentage of Last Rate Revision: -2.700%

Effective Date of Last Rate Revision: 01/01/2019

Filing Method of Last Filing: Review & Approval

SERFF Tracking Number of Last Filing: AWLP-131560564

Company Rate Information

Company

Name:

Overall %

Indicated

Change:

Overall %

Rate

Impact:

Written Premium

Change for

this Program:

Number of Policy

Holders Affected

for this Program:

Written

Premium for

this Program:

Maximum %

Change

(where req'd):

Minimum %

Change

(where req'd):Anthem Health Plans, Incdba Anthem Blue Crossand Blue Shield ofConnecticut

15.200% 15.200% $45,881,364 21,892 $307,035,360 25.700% 0.100%







Rate/Rule Schedule

Item

No.

Schedule

Item

Status

Document Name

Affected Form Numbers

(Separated with commas) Rate Action Rate Action Information Attachments

1 Actuarial memorandum ExhibitA

CT ON HIX HMO (1-20), CTOFF HIX HMO (1-20), CT ONHIX PPO (1-20), CT OFF HIXPPO (1-20)

Revised Previous State Filing Number:201803932Percent Rate Change Request:6.5








13

HIOS Plan Name 2020 HIOS Plan IDOn/Off

Exchange Metal Level Network Name Area(s) Offered Plan Category

Plan Specific Rate Change (excluding

aging) {1},{2}

Catastrophic HMO Pathway X Enhanced 86545CT1230005 On Catastrophic Pathway X Enhanced All Renewing -1.9%Bronze HMO Pathway X Enhanced Tiered 86545CT1230013 On Bronze Pathway X Enhanced Tiered All Renewing 11.2%Gold HMO Pathway X Enhanced Tiered 86545CT1230016 On Gold Pathway X Enhanced Tiered All Renewing -7.3%Anthem HMO Catastrophic Pathway Enhanced 8150/0% 86545CT1310033 Off Catastrophic Pathway Enhanced All Renewing -1.9%Anthem Bronze HMO Pathway Enhanced Tiered 6100/7100/0%/50% 86545CT1310054 Off Bronze Pathway Enhanced Tiered All Renewing 7.7%Anthem Bronze HMO Pathway Enhanced 6200/12400/40% for HSA 86545CT1310019 Off Bronze Pathway Enhanced All Renewing 10.3%Anthem Bronze HMO Pathway Enhanced 6500/50% 86545CT1310055 Off Bronze Pathway Enhanced All New N/AAnthem Silver HMO Pathway Enhanced Tiered 2800/3800/10%/40% for HSA 86545CT1310051 Off Silver Pathway Enhanced Tiered All Renewing 2.7%Anthem Silver HMO Pathway Enhanced Tiered 2500/5000/10%/40% 86545CT1310052 Off Silver Pathway Enhanced Tiered All Renewing -0.3%Anthem Silver HMO Pathway Enhanced 4500/30% 86545CT1310056 Off Silver Pathway Enhanced All New N/AAnthem Gold HMO Pathway Enhanced Tiered 2000/3000/10%/30% 86545CT1310050 Off Gold Pathway Enhanced Tiered All Renewing 0.6%Bronze PPO Standard Pathway X for HSA 86545CT1330009 On Bronze Pathway X All Renewing 14.6%Bronze PPO Standard Pathway X 86545CT1330002 On Bronze Pathway X All Renewing 15.0%Bronze PPO Pathway X 86545CT1330013 On Bronze Pathway X All New N/ASilver PPO Standard Pathway X 86545CT1330001 On Silver Pathway X All Renewing 0.4%Gold PPO Standard Pathway X 86545CT1330003 On Gold Pathway X All Renewing 16.7%Gold PPO Pathway X 86545CT1330015 On Gold Pathway X All New N/A

NOTES:{1} Plan level increases in rates do not include demographic changes in the population.

Exhibit A - Non-Grandfathered Rate Changes

Anthem Health Plans, Inc.Individual

Rates Effective January 1, 2020

Supporting Document Schedules Satisfied - Item: Actuarial MemorandumComments:

Attachment(s): 2020 Actuarial Memorandum_CT IND - G1800-State_20190909.pdf2020 Actuarial Memorandum_CT IND - G1800-State_20190909 Redlined.pdfItem Status:Status Date:

Bypassed - Item: Consumer Disclosure FormBypass Reason: Not needed at this time.Attachment(s):Item Status:Status Date:



Item Status:Status Date:

Satisfied - Item: Unified Rate Review TemplateComments:Attachment(s): URRT-CT-IND-86545-1Q20 -Submission-2019-09-09.pdfItem Status:Status Date:

Satisfied - Item: Unique Plan JustificationsComments:Attachment(s): CT Anthem Individual 2020 All Unique Plan Justification Sets 20190708.pdfItem Status:Status Date:

Satisfied - Item: AV ScreenshotsComments:Attachment(s): CT Anthem Individual 2020 Plan AVs 20190708.pdf







Item Status:Status Date:

Satisfied - Item: Rate TemplateComments:Attachment(s): 1Q20_CT_86545_IND_On-Off_All-Plans_RateTables 20190909.pdfItem Status:Status Date:

Satisfied - Item: Summary of BenefitsComments:Attachment(s): CT Anthem Individual 2020 Summary of Benefits 7.8.19.pdfItem Status:Status Date:







State: ConnecticutHIOS Issuer ID: 86545NAIC Company Code: 60217

ACTUARIAL MEMORANDUM

1. General Information

• Company Identifying InformationCompany Legal Name: Anthem Health Plans, Inc.

Primary Contact Telephone Number: (203) 677-8510Primary Contact Email Address: [email protected]

2. Scope and Purpose of the Filing

As required by the Connecticut Insurance Department (CID) this Actuarial Memorandum supersedes and replaces in its entirety of the memorandum submitted to the CID on July 8, 2019. This is a rate filing for the Individual market ACA-compliant plans offered by Anthem Health Plans, Inc., also referred to as Anthem. The policy forms associated with these plans are listed below. The proposed rates in this filing will be effective for the 2020 plan year beginning January 1, 2020, and apply to plans both On-Exchange and Off-Exchange.

Market: IndividualEffective Date: January 1, 2020

• Company Contact InformationPrimary Contact Name: Tu Nguyen

CT OFF HIX PPO (1-20)

The Memorandum provides support to the rate development and demonstrates that rates are established in compliance with state laws and provisions of the Affordable Care Act. The rates proposed in this submission reflect the insurer participation in the market and regulatory framework as of September 9, 2019. If the regulatory framework or insurer participation in the market change after this date, proposed rates may no longer be appropriate and should be reevaluated for revision and resubmission. This rate filing is not intended to be used for other purposes.

Policy Form Number(s):CT ON HIX HMO (1-20)CT OFF HIX HMO (1-20)CT ON HIX PPO (1-20)

3. Proposed Rate Increase(s)

As a result of the rate filing process the CID has informed Anthem that they will approve annual rate changes by plan that range from 4.2% to 7.3%, with rate changes by plan from (7.3%) to 16.7%. These ranges are based on the renewing plans, and are consistent with what is reported in the Unified Rate Review Template. Exhibit A shows the rate change for each plan.

Factors that affect the rate changes for all plans include:

Trend: This includes the impact of inflation, provider contracting changes, and changes in utilization of services.

Morbidity: There are anticipated changes in the market-wide morbidity of the covered population in the projection period.

Changes in some non-benefit expenses that are applied on a PMPM basis.

Changes in the claim cost relativity by area.

4. Experience and Current Period Premium, Claims, and Enrollment

The experience period premium and claims reported in Worksheet 1, Section I of the Unified Rate Review Template (URRT) are for the non-grandfathered, single risk pool compliant policies of the identified legal entity in the Individual market.

• Paid Through Date

The experience reported in Worksheet 1, Section I of the URRT reflects the incurred claims from January 1, 2018 through December 31, 2018 based on claims paid through March 31, 2019.

Benefit modifications, including changes made to comply with updated AV requirements.

Changes in taxes, fees, and some non-benefit expenses, including the reinstatement of Health Insurer Tax in 2020.

Although rates are based on the same claims experience, the rate changes vary by plan due to the following factors:

Changes in benefit design that vary by plan.

Updates in benefit relativity factors among plans.

Updated adjustment factors for catastrophic plans.

• Current Date

The Current Date for Current Enrollment and Current Premium PMPM in Worksheet 2, Section II of the URRT is April 30, 2019.

The allowed claims are determined by subtracting non-covered benefits, provider discounts, and coordination of benefits amounts from the billed amount.

Allowed and incurred claims are completed using the chain ladder method, an industry standard, by using historic paid vs. incurred claims patterns. The method calculates historic completion percentages, representing the percent of cumulative claims paid of the ultimate incurred amounts for each lag month. Claim backlog files are reviewed on a monthly basis and are accounted for in the historical completion factor estimates.

Allowed and incurred claims reported in Worksheet 1, Section I of the URRT are $305,154,820 and $245,830,467, respectively. These amounts differ from those shown in Exhibit B due to the URRT including Rx Rebates.

Exhibit S details historical experience for the policy forms included in this filing.

5. Benefit Categories

The methodology used to determine benefit categories in Worksheet 1, Section II of the URRT is as follows:

• Experience Period Premium

The earned premium prior to MLR rebate is $313,763,212. The earned premium reflects the pro-rata share of premium based on policy coverage dates.

The preliminary MLR rebate estimate is $0, which is consistent with Anthem's December 31, 2018 general ledger estimate allocated to the non-grandfathered portion of Individual business. This is an estimated amount and will not be final until 7/31/2019. Using this MLR estimate, the net earned premium is $313,763,212 for the legal entity as reported in cell E18 of Worksheet 1, Section I of the URRT.

• Allowed and Incurred Claims Incurred During the Experience Period

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.

6. Projection Factors

The experience period claims in Worksheet 1, Section I of the URRT are projected to the projection period using the factors described below. Exhibit C provides a summary of the factors.

• Trend Factors (cost/utilization)

As part of the regulatory review process the CID has guided Anthem to reduce trend from a proposed 9.3% trend in the initial filing to 7.75% trend. The CID has also guided Anthem to revise the rating period that trend is applied from 24.2 months to 24 months. The annual pricing trend used in the development of the rates is 7.7%. This annual pricing trend is applied to both Years 1 and 2 in Worksheet 1 of the URRT. 12.0 months of trend are applied to Year 1 and 12.0 months of trend to Year 2. The trend is developed by normalizing historical benefit expense for changes in the underlying population and known cost drivers, which are then projected forward to develop the pricing trend. Examples of such changes include contracting, cost of care initiatives, workdays, average wholesale price, and expected introduction of generic drugs. For projection, the experience period claims are trended 24.0 months from the member-weighted midpoint of the experience period, which is June 26, 2018, to the member-weighted midpoint of the projection period, which is July 1, 2020. Exhibit E has details.

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

Capitation: Includes all services provided under one or more capitated arrangements.

Prescription Drug: Includes drugs dispensed by a pharmacy and rebates received from drug manufacturers.

• Morbidity Adjustment

Adjustments are made to account for the differences between the average morbidity of the experience period population and that of the anticipated population in the projection period.

• Plan Design Changes

Changes in benefits include the following items. Exhibit E shows each adjustment factor.

Network Adjustments: Adjustments are made to account for the member cost sharing change for Out-of-Network benefits between the experience period and the projection period for some plans.

The projected population consists of expected retention of existing policies and new sales. The new sales include the previously uninsured population and previously insured populations from other carriers or coverage. The morbidity adjustment reflects projected Anthem and market changes in morbidity. Prior experience has exhibited market shrinkage and morbidity increases year over year. With anticipated growing market volatility, the expectation is that selective lapse and market deterioration will continue in 2020 due to increased selective entry and exit as members make health care decisions in the guaranteed issue, community rated ACA marketplace. Exhibit E shows the morbidity factor. Per guidance from the CID, the morbidity impact has been decreased from 1.047 to 1.01.

• Changes in Demographics (Normalization)

The experience period claims are normalized to reflect anticipated changes in age/gender, area, network, and benefit plan in the projection period. Exhibit D provides detail of each normalization factor below:

Age/Gender: The assumed claims cost is applied by age and gender to the experience period membership distribution and the projection period membership distribution.

Area/Network: The area claims factors are developed based on an analysis of allowed claims by network, mapped to the prescribed rating areas using the subscriber's 5-digit zip code. Per guidance from the CID, the 2020 area factors are unchanged as compared to 2019.

Benefit Plan: The experience period claims are normalized to reflect the average benefit level in the projection period using benefit relativities. The benefit relativities include the value of cost shares and anticipated changes in utilization due to the difference in average cost share requirements.

Rx Adjustments: Adjustments are made to reflect differences in the Rx formulary, Rx networks and discounts, and mail order programs between the experience period and the projection period.

• Other Adjustments

Other adjustments to the experience claims data include the following items. Exhibit E and Exhibit F show the factors used for each adjustment.

Benefits in excess of the essential health benefits in the projection period are included. Exhibit F provides details of additional non-EHB benefits.

7. Manual Rate Adjustments

The experience period claims are 100% credible based on the credibility method used. Therefore, a manual rate was not used in the rate development.

Change in Medical Management: This adjustment reflects the medical management impact not already included in the claims experience and trend.

Induced Demand Due to Cost Share Reductions: Individuals who fall below 250% of the Federal Poverty Level and enroll in On-Exchange silver plans will be eligible for cost share reductions. The percentage of enrollment in CSR Plans in the experience period is compared to that of the projection period to adjust for the different induced demand level due to CSR between the two periods.

Grace Period: The claims experience has been adjusted to account for incidences of enrollees not paying premiums due during the first month of the 90-day grace period when the QHP is liable for paying claims. Per guidance from the CID, this adjustment has been removed.

Rx Rebates: The projected claims cost is adjusted to reflect anticipated Rx rebates. These projections take into account the most up-to-date information regarding anticipated rebate contracts, drug prices, anticipated price inflation, and upcoming patent expirations. Per guidance from the CID, the Rx Rebate amount has been revised from $12.86 to $16.16.

Projected costs of pediatric dental and vision benefits are included. Per guidance from the CID, the Pediatric Dental/Vision Claim assumptions have been revised from $2.65/$0.23 PMPM to $1.09/$0.07 PMPM.

As an initiative to provide affordable coverage, Anthem performed an analysis to identify low quality and high cost inefficient providers, and removed them from our network. The rate development reflects a 1.7% savings for this initiative. Exhibit C shows this Provider Scoping Initiative impact.

8. Credibility of Experience

• Credibility Method Used

Based on an analysis of historical data, the standard for fully credible experience is 10,500 members.

• Projection Period Index Rate

The projection period Index Rate is equal to projected allowed claims PMPM for the essential health benefits of Anthem's non-grandfathered business in the Individual market. It reflects the anticipated claim level of the projection period including impact from trend, benefit and demographics as described in Section 6 of this memo.

The projected Index Rate is reported in Worksheet 1, Section II, cell F42 of the URRT and is also shown in Exhibit C. Note there are minor variances between the projection period Index Rate in the URRT and Actuarial Memorandum due to rounding methodology in the URRT. No benefits in excess of the essential health benefits have been included in this amount.

To determine credibility, the following formula was used:

• Resulting Credibility Level Assigned to Base Period Experience

With 38,281 members, the credibility level assigned to the experience period claims is 100%.

9. Establishing the Index Rate

• Experience Period Index Rate

The experience period Index Rate is equal to the allowed claims PMPM for the essential health benefits of Anthem's non-grandfathered business in the Individual market. The experience period Index Rate is $664.18. Due to rounding restrictions in the URRT, the experience period Index Rate displayed in Worksheet 1, Section II of the URRT may be slightly different from this number. No benefits in excess of the essential health benefits have been included in this amount.

10. Development of the Market-wide Adjusted Index Rate

The Market-wide Adjusted Index Rate is calculated as the Index Rate adjusted for all allowable market-wide modifiers defined in the market rating rules. The three market-wide adjustments - Risk Adjustment, Reinsurance, and Exchange User Fee adjustment - are described below. In compliance with URR Instructions, these adjustments were applied on an allowed basis in the development of the Market-wide Adjusted Index Rate. Exhibit C illustrates the development of the Market-wide Adjusted Index Rate. Note that there are minor variances between the Market-wide Adjusted Index Rate in the URRT and Actuarial Memorandum due to rounding methodology in the URRT.

• Risk Adjustments PMPM

The Exchange User Fee is applied as an adjustment to the Market-wide Adjusted Index Rate at the market level as shown in Exhibit C.

11. Plan Adjusted Index Rate

The Plan Adjusted Index Rate is calculated as the Market-wide Adjusted Index Rate adjusted for all allowable plan level modifiers defined in the market rating rules. Exhibit J shows the development. The plan level modifiers are described below:

AV and Cost Sharing Adjustments: This is a multiplicative factor that adjusts for the projected paid/allowed ratio of each plan, based on the AV metal value with an adjustment for utilization differences due to differences in cost sharing.

Provider Network Adjustments: This is a multiplicative factor that adjusts for differences in projected claims cost due to different network discounts.

Per guidance from the CID, the Risk Adjustment receipt has been revised from $13.72 to $17.29.

The projected risk adjustment PMPMs reported in Worksheet 2 of the URRT are on a paid claim basis, while the projected amount applied to the development of Market-wide Adjusted Index Rate is on an allowed claim basis. Exhibit C and Exhibit G provide details.

• Projected ACA Reinsurance Recoveries Net of Reinsurance Premium

Beginning in 2017, the Federal reinsurance program is no longer in effect. The projected reinsurance amount is $0.

• Exchange User Fees

Exchange User Fee: The expected charge is estimated at 1.65% of premium. The resulting fee/percentage is applied evenly to all plans in the risk pool, both On and Off Exchange.

Adjustments for Benefits in Addition to the Essential Health Benefits: This multiplicative factor adjusts for additional non-EHB benefits shown in Exhibit F.

• Geographic Factor Calibration

The geographic factors are developed from historical claims experience. The geographic calibration adjustment is calculated as the member weighted average of the geographic factors, using the projected membership distribution by area.

13. Consumer Adjusted Premium Rate Development

The Consumer Adjusted Premium Rate is calculated by calibrating the Plan Adjusted Index Rate by the Age and Geographic calibration factors described above, and applying consumer specific age and geographic rating factors. Exhibit N has the sample rate calculations.

Catastrophic Plan Adjustment: This adjustment reflects the projected costs of the population eligible for catastrophic plans. The catastrophic adjustment factor is applied to catastrophic plans only; all other plans have an adjustment factor of 1.0.

Adjustments for Distribution and Administrative Cost: This is an additive adjustment that includes all the selling expense, administration and retention Items shown in Exhibit H, with the exception of the Exchange User Fee. The Exchange User Fee has been included in the Market-wide Adjusted Index Rate at the market level.

12. Calibration

The Plan Adjusted Index Rate is calibrated by the Age and Geographic factors so that the schedule of premium rates for each plan can be further developed. Exhibit K shows both calibration factors.

• Age Curve Calibration

The age factors are based on the Default Federal Standard Age Curve. The age calibration adjustment is calculated as the member weighted average of the age factors, using the projected membership distribution by age, with an adjustment for the maximum of 3 child dependents under age 21. Under this methodology, the approximate average age rounded to the nearest whole number for the risk pool is 50.

14. Projected Loss Ratio

• Projected Federal MLR

17. Terminated Plans and Products

Exhibit P provides a listing of 2018 and 2019 plans that will be terminated prior to January 1, 2020. The mapping of terminated plans to the new plans is also included.

18. Plan Type

The plan type for each plan reported in Worksheet 2, Section I of the URRT is consistent with the option chosen from the drop-down box.

Exhibit I shows the projected Federal MLR for the products in this filing. The calculation is an estimate and is not meant to be a true measure for Federal or State MLR rebate purposes. The MLR for Anthem's entire book of Individual business will be compared to the minimum Federal benchmark for purposes of determining regulation-related premium refunds. Also note that the projected Federal MLR presented here does not capture all adjustments, including but not limited to: three-year averaging, credibility, dual option, and deductible. Anthem's projected MLR is expected to meet or exceed the minimum MLR standards at the market level after including all adjustments.

15. Actuarial Value Metal Values

The Actuarial Value (AV) Metal Values reported in Worksheet 2, Section I of the URRT are based on the AV Calculator. To the extent a component of the benefit design was not accommodated by an available input within the AV Calculator, the benefit characteristic was adjusted to be actuarially equivalent to an available input within the AV Calculator for purposes of utilizing the AV Calculator as the basis for the AV Metal Values. When applicable, benefits for plans that are not compatible with the parameters of the AV Calculator have been separately identified and documented in the Unique Plan Design Supporting Documentation and Justification that supports the Plan & Benefits Template.

16. Membership Projections

Membership projections are reported in Worksheet 2, Section IV of the URRT. They are based on historical and current enrollment, and expected new sales and lapses.

For Silver level plans in the Individual market, the portion of projected membership that will be eligible for cost-sharing reduction subsidies at each subsidy level are estimated from the enrollment data in the experience period. Exhibit O provides projected distributions for each plan.

19. Tiered-Network Benefit Plans

The 2020 Individual plan portfolio contains six plans with tiered in-network benefits. These plans have up to three networks of provider care and different cost share provisions for each network:

Current capital and surplus for Anthem Health Plans, Inc. is $360,256,649 as shown on page 5, line 49 of the 2018 Annual Statement.

21. State Actuarial Memorandum Requirements

Supplemental material to satisfy the 2020 filing requirements from Bulletin HC-90-19 and Bulletin HC-81-19 issued on February 15, 2019, is included below.

The proposed retention charge in the rate development is 19.4%. This is comprised of both fixed and variable expenses and includes selling expense, administrative expense, federal fees, federal income tax, exchange fees and risk and net profit margin. The December 31, 2018, Annual Statement for Anthem Health Plans, Inc. has a retention amount of 21.4%. This amount is calculated from the Analysis of Operations by Lines of Business exhibit on page 7: 1 – [line 17, column 2 $797,383,558 / line 7, column 2 $1,015,000,670] = 21.4%.

Exhibit Q details Anthem's unit cost trend, utilization trend, technology trend, and other trend components.

The Tier 1 network is a subset of preferred in-network providers; members have the lowest cost share amounts when utilizing this preferred network.

The Tier 2 network is comprised of the remaining in-network providers and has higher cost share amounts compared to the Tier 1 network.

For tiered PPO plans, the Tier 3 network is comprised of the out-of-network providers and has the highest cost share amounts.

Additional cost of care savings are expected from increased utilization and new providers contracting of Tier 1 providers. The new provider contracting initiative for tiered products is still ongoing at the time of the filing. These savings are used to reduce the tiered plan rate compared to a non-tiered plan with similar cost share provisions. Any new information different from current assumptions would be reflected at the next rate filing.

20. Effective Rate Review Information

The RBC Ratio for Anthem Health Plans, Inc. is 462.6% as of 12/31/2018.

Benefit buy-down analysis and impact on trend: No explicit buy-down impact was used in the rate development.

22. Reliance

In support of this rate development, various data and analyses were provided by other members of Anthem’s actuarial staff, including data and analysis related to cost of care, valuation, and pricing. I have reviewed the data and analyses for reasonableness and consistency. I have also relied on Michele Archer, FSA, MAAA to provide the actuarial certification for the Unique Plan Design Supporting Documentation and Justification for plans included in this filing.

23. Actuarial Certification

Exhibit R shows the claim lag triangle for the experience data.

The Annual Certification for substituting non-dollar limits on an essential health benefit can be found in Exhibit T.

Exhibit A in conjunction with Appendix A show a summary of the requested rate changes.

H.B. No. 5210 an act mandating insurance coverage of essential health benefits and expanding mandated health benefits for women, children, and adolescents was passed. The estimated cost impact of this bill is $2.11 PMPM and this has been built into the rates.

S.B. No 376 an act concerning health insurance coverage for prosthetic devices was passed. The estimated cost impact of this bill is $0.15 PMPM and this has been built into the rates.

13

HIOS Plan Name 2020 HIOS Plan IDOn/Off

Exchange Metal Level Network Name Area(s) Offered Plan Category

Plan Specific Rate Change (excluding

aging) {1},{2}

Catastrophic HMO Pathway X Enhanced 86545CT1230005 On Catastrophic Pathway X Enhanced All Renewing -1.9%Bronze HMO Pathway X Enhanced Tiered 86545CT1230013 On Bronze Pathway X Enhanced Tiered All Renewing 11.2%Gold HMO Pathway X Enhanced Tiered 86545CT1230016 On Gold Pathway X Enhanced Tiered All Renewing -7.3%Anthem HMO Catastrophic Pathway Enhanced 8150/0% 86545CT1310033 Off Catastrophic Pathway Enhanced All Renewing -1.9%Anthem Bronze HMO Pathway Enhanced Tiered 6100/7100/0%/50% 86545CT1310054 Off Bronze Pathway Enhanced Tiered All Renewing 7.7%Anthem Bronze HMO Pathway Enhanced 6200/12400/40% for HSA 86545CT1310019 Off Bronze Pathway Enhanced All Renewing 10.3%Anthem Bronze HMO Pathway Enhanced 6500/50% 86545CT1310055 Off Bronze Pathway Enhanced All New N/AAnthem Silver HMO Pathway Enhanced Tiered 2800/3800/10%/40% for HSA 86545CT1310051 Off Silver Pathway Enhanced Tiered All Renewing 2.7%Anthem Silver HMO Pathway Enhanced Tiered 2500/5000/10%/40% 86545CT1310052 Off Silver Pathway Enhanced Tiered All Renewing -0.3%Anthem Silver HMO Pathway Enhanced 4500/30% 86545CT1310056 Off Silver Pathway Enhanced All New N/AAnthem Gold HMO Pathway Enhanced Tiered 2000/3000/10%/30% 86545CT1310050 Off Gold Pathway Enhanced Tiered All Renewing 0.6%Bronze PPO Standard Pathway X for HSA 86545CT1330009 On Bronze Pathway X All Renewing 14.6%Bronze PPO Standard Pathway X 86545CT1330002 On Bronze Pathway X All Renewing 15.0%Bronze PPO Pathway X 86545CT1330013 On Bronze Pathway X All New N/ASilver PPO Standard Pathway X