New York Advisor Update

NEW YORK EDITION

JANUARY 2009

Important changes we are making to our HMO and Direct HMO health plans

We want you to be aware of some important changes that we are making to our HMO and Direct HMO health plans that will be effective for new groups and existing groups upon renewal beginning April 1, 2009.

Small Group HMO/DHMO

Small groups renewing into HMO plans will have the following changes upon renewal:

Preventive benefits will be covered at 100 percent for covered services received from an in-network provider with no member copayment. These services include, among others, annual physical exams, well woman and well child care, and certain vaccinations. Some services may be subject to age and frequency limitations. This change is part of our commitment to helping our members maintain good health.

Additional cost sharing is being added. There will be primary office visit copayment for diagnostic radiology services and medical supplies (including diabetic supplies), and 20 percent coinsurance for durable medical equipment (DME) and orthotics and prosthetics. Diabetic DME* will now be subject to a primary office visit copayment. *Up to a maximum of 52 copays per year for mandated diabetic supplies and equipment.

There will be split copays for primary and specialist office visits (see table below).

We continue to sell our small group HMO and DHMO options 11 and 12: Check out the new small group benefit summary available here.

Large Group HMO/DHMO

Large groups will also have the same in-network preventive care benefits, as well as the increased cost sharing. In addition, there are two new options for large groups with $15/$30 and $20/$35 copayments. Please reference the benefit summary for more details

We are communicating these changes to our existing small and large HMO and DHMO groups before these changes take effect.

Small groups will be getting this letter.
Large groups will be getting this letter, from their account managers or Sales VP.

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INDEX

> Important changes to HMO and Direct HMO

> Reminder: General Notice of Pre-existing Conditions for small groups

> NextRx Materials Updated

> CMS Requires Mandatory Medicare Secondary Payer Reporting as of Jan. 1, 2009

> Employer e-mail match notification

Reminder: A General Notice of Preexisting Conditions must be presented to small group members before open enrollment.

This is a HIPAA requirement. You can find the appropriate notice at empireblue.com > Small Group Forms > General Notice of Pre-existing Conditions. Here's a link to our forms section.

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NextRx Materials Updated

The NextRx Drug Formulary and 50 Commonly Requested Drug flyers have been updated and are available via empireblue.com. Click here to view the latest materials available.

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CMS Requires Mandatory Medicare Secondary Payer Reporting as of Jan. 1, 2009

Starting Jan. 1, 2009, group health plans (GHP) must provide reports to the Centers for Medicare and Medicaid Services (CMS) about plan participants who also have Medicare coverage. These reports help CMS coordinate with group health plans whose members have Medicare, thus saving CMS money.

Insurers and third-party administrators are primarily responsible for providing these reports on behalf of the group health plans. Empire BlueCross and BlueShield will provide this reporting on behalf of our groups.

What information will be required from our clients?

The mandate requires that we provide the following information:

§ Eligibility data for members who meet certain age or disability criteria

§ Social security numbers (SSNs) and/or health insurance claim numbers (HICN) for those members

§ The group's tax identification number (TIN)

§ Employer group size

Why is CMS asking for this information?

We already report most of this information through a voluntary data exchange agreement currently in place with CMS. Beginning Jan. 1, 2009, reporting will be mandatory. The data collected enables CMS to pay claims accurately the first time by determining primary versus secondary payer responsibilities.

What's the penalty for non-compliance?

Failure to report the required eligibility data may subject Empire and potentially your clients to a civil penalty of $1,000 for each day of noncompliance for each individual for which the information should have been submitted. No fines will be issued as long as groups and carriers make good-faith efforts towards compliance.

No action on the part of you or your clients is needed at this time. If we require additional information from your clients in the future, your Sales representative will contact you with instructions. If you have any questions, please contact your Sales representative.

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Employer e-mail match notification

We are committed to serving the needs of our customers and their communities. Part of that commitment means finding ways to more effectively and efficiently communicate with our local group customers. In 2009, we are taking several steps to boost the number of employer e-mail addresses we have in our marketing database. This helps us to become more environmentally friendly in the communities we serve by reducing the number of printed and mailed communications that are sent out each year.

We recently contracted with an online business directory to match e-mails to our employer physical addresses and acquired thousands of existing employer e-mail addresses that we previously did not have.

The vendor we are working with complies with industry CAN SPAM regulations, and the records have gone through several matching protocols to ensure accuracy. As an extra measure, prior to adding the new e-mail addresses to our marketing database, we will send an opt-out e-mail to all the employers affected. This opt-out communication, which is scheduled for mid-February, will clearly explain how we acquired the employer's e-mail address and our intention to begin e-mailing quarterly informational newsletters and other time-sensitive bulletins instead of sending them through regular mail.

Employers will continue to receive billing information through the mail, unless they have already enrolled in online group billing.

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Services provided by Empire HealthChoice HMO, Inc. and/or Empire HealthChoice Assurance, Inc., licensees of the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield Plans, serving residents and businesses in the 28 eastern and southeastern counties of New York State.