Guam News - Guam News

Guam - Vice Speaker B.J. Cruz has fired back at Governor Calvo saying that the fact remains that Calvo's SelectCare overcharged for its health insurance plan by millions of dollars; that the Legislature's calculation of the health rebate owed was "reasonable"; and that "only a loophole prevented SelectCare from paying even more" than the $8.2 million it is required to pay on August 1st.

SEE the rebate amounts for the states and territories on healthcare.gov HERE

The democrat Senator was responding to Governor Calvo's weekly address in which the Governor accused democrat lawmakers of already appropriating the health insurance rebates which are supposed to be paid out to GovGuam employees next month.

Senator Cruz defends the $7.5 million appropriation which was made last year. He says it is less than the $8.2 million SelectCare now owes, and it will be spent on "priorities like paying  your tax refunds, keeping the electricity on at public schools, and investing in tourism."

In addition, the amount of rebate owed by Calvo's SelectCare would have been as much as $18-million, says the Vice-Speaker, if the insurer's 2011 MLR report* had included the premiums paid in the first 3 months of the 2011 Fiscal Year which began October 1st 2010. *[the Medical Loss Ratio under the 80/20 rule; 85/15 for large group plans like the Calvo SelectCare plan that covers GovGuam employees]

Cruz points out that in October, November and December of 2010, $18-million in premiums was paid, but only $5.5 million in claims were paid out. Just 30.5%  of the premiums paid in the first quarter of FY '11 were spent on health care, says Cruz. The Affordable Health Care Act requires that 85%  of premiums paid under large group plans (like the SelectCare plan for GovGuam) be spent on health care. But that provision of the act did not take effect until January 1 of 2011.

The Governor can not change the fact GovGuam "overpaid millions of dollars to Calvo’s SelectCare in 2010," states Cruz. And all that money, he says, "should be returned" to the subscribers who were over-charged.

All the Governor "has to do to meet any shortfall he may imagine is collect the penalties and unused tax dollars SelectCare is now keeping because of a loophole in federal law.”

Senator Cruz also accuses the Governor of not collecting a $900-thousand dollar penalty owed by CalvoSelect Care to GovGuam. The penalty, says Cruz,  is required under P.L. 30- 93 which mandates timely reporting of medical loss data to the government or the insurer is assessed a penalty equal to 2.5% of the premiums paid in the succeeding quarter.

"Because Calvo’s SelectCare failed to meet the requirement ... on at least two occasions," states Senator Cruz, "the insurer was assessed a total penalty of about $900,000 ... a penalty the governor seems unwilling to collect."

READ Senator Cruz's release in FULL below:

Cruz to Calvo on Health Insurance Rebate: Calvo’s SelectCare Can’t Change the Facts
For Immediate Release

(July 8, 2012- Hagatna)  The Legislature’s calculations were reasonable, Calvo’s SelectCare will be returning millions of dollars to the government and its employees, and only a loophole prevented SelectCare from paying even more.  That is Vice Speaker Benjamin J.F. Cruz’s response to Governor Calvo’s weekly address issued Friday afternoon.

In that address, Calvo criticized the 31st Guam Legislature’s Democratic Leadership by asserting that “something went wrong with the calculation” used to determine the amount of money Calvo’s SelectCare would return to the Government of Guam and its employee’s as required by federal law.

Calvo essentially argued two points: first, that the legislature appropriated a rebate amount greater than the sum needed to return your money and second that there was no factual basis to believe that the rebate amount owed by Calvo’s SelectCare could have been as high as $18 million. Let’s take each assertion separately:

What did the legislature appropriate and was it accurate?

A: Last year, the legislature estimated a total rebate owed to GovGuam, its employees, and retirees of $8.7 million.  This number was based on medical claims and premiums paid for FY2010 and premiums paid in FY 2011. Of the $8.7 million estimated, only $6.5 million was slated for a rebate to GovGuam. This is because you—the tax payer paid more than 75% of the premiums given to Calvo’s SelectCare while our employees paid about 25%. This means that the dollar amount returned ($8.7 million) would be apportioned to the government, its employees, and retirees in accordance with those percentages.

While the legislature estimated the total rebate owed to be $8.7 million, it actually appropriated only $7.5 million to priorities—priorities like paying your tax refunds, keeping the electricity on at public schools, and investing in tourism.  Now you might be asking yourself how the money owed to tax payers (the government) grew from the $6.5 million cited above to the $ 7.5 million we are talking about now.  The answer is simple. P.L. 30- 93 required the timely reporting of medical loss data to the government or its insurer would be assessed a penalty equal to 2.5% of the premiums paid in the succeeding quarter.  Because Calvo’s SelectCare failed to meet the requirement cited below on at least two occasions, the insurer was assessed a total penalty of about $900,000.  When taken together, the 6.5 million returned to the tax payer (the government) and the approximate $900,000 in penalties equals the $7.5 million appropriated by the legislature last year.  This is a penalty the governor seems unwilling to collect.  The relevant section of law is cited below.

P.L. 30-93 Pg.5 Line 11

Failure to comply with requirements of this Section will result in a 2.5% reduction of the quarterly premiums from the non-compliant health insurance carrier. The information shall be provided quarterly. The reduction shall be deducted from the premiums due to the carrier in the succeeding quarter, if the information is not received within forty-five (45) days of the end of the quarter.    

Was there a factual basis for the belief that the rebate amount could have been up to $18 million?

A: Yes.  Had it not been for a technical loophole in the effective date of the Affordable Care Act, Calvo’s SelectCare might be paying you (taxpayers and employees) millions of dollars more.

The Government of Guam’s fiscal year and health insurance contract begins on October 1st of every fiscal year. Tokio Marine MLR reporting hereafter referred to as Calvo’s SelectCare included only calendar year 2011 earned premiums and incurred claims and did not account for the first quarter premiums from fiscal year 2011 (October 1, 2010 to December 31, 2010) of approximately $18,105,005 and claims of $5,526,034 or an MLR of 30.5%.

If the Calvo’s SelectCare 2011 MLR filing included the first three months of premiums and claims from the government of Guam fiscal year 2011 contract then it increases the large group rebate owed by Calvo’s SelectCare from $10,182,481 to approximately $19,821,967. Clearly this situation represents a scenario the Patient Protection and Affordable Care Act seeks to avoid: Americans Not Receiving Value for their Premium Dollar.

This concern was made clear in June 26th letter to the Secretary of Health and  Human Services (attached) and is contrary to Calvo’s claim of silence on matters related to the application of the rebate.

Cruz said, “I have great personal respect for the Governor but he is playing a game of misdirection that is not supported by the facts.  The government overpaid millions of dollars to Calvo’s SelectCare in 2010, it should be returned to you, and all he has to do to meet any shortfall he may imagine is collect the penalties and unused tax dollars SelectCare is now keeping because of a loophole in federal law.”