Contents

2013 Health Insurance Trust Fund Annual Report Arizona Department of Administration
Human Resources Division – Benefit Services
Janice K. Brewer
Brian C. McNeil
Governor Director FOREWORD
Benefit Options is the program name for the benefits offered to State of Arizona ("State") employees and retirees by the Arizona Department of Administration ("ADOA"). This report provides a broad overview of the Benefit Options program, and meets the requirements of A.R.S. §38-652 (G) and A.R.S. §38-658 (B). The data shown is presented for the period January 1, 2013 through December 31, 2013. The active and retiree plans were concurrent for this period. For this report, ADOA internally developed a consistent statistical model based on generally accepted actuarial principles and standards, including Milliman Health Cost Guidelines Commercial Rating Structures, July 1, 2012. Any questions relating to the contents of this report should be addressed to: Arizona Department of Administration Human Resources Division 100 N. 15th Avenue, Suite 261 Phoenix, Arizona 85007 Telephone: 602-542-5482 Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Table of Contents


Health Insurance Trust Fund
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Figures and Tables

Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Report Background

This document reports the financial status of the Employee Health Insurance Trust Fund
pursuant to A.R.S. §38-652 (G), which reads:
The Department of Administration shall annually report the financial status of the trust account to officers and employees who have paid premiums under one of the insurance plans from which monies were received for deposit in the trust account since the inception of the health and accident coverage program or since submission of the last such report, whichever is later. The Benefit Options program is accounted for in two different funds. The Special Employee Health Fund, also known as Fund 3015 or the Health Insurance Trust Fund (HITF) encompasses the medical and dental programs and the appropriated expenditures for ADOA, Human Resources Division, Benefit Services operations. The ERE/Benefits Administration Fund, or Fund 3035, is primarily a "pass through" fund for other benefits including vision, life, and disability insurance, and flexible spending accounts. The benefits offered through the program fall into one of two types — self-funded or fully-insured. For 2013, the health benefit plan and the dental PPO plan were self-funded, whereas the dental HMO plan, vision plan, life, and disability insurance plans were fully-insured. The State's self-funded medical plan began on October 1, 2004, and consists of both integrated and nonintegrated options for the medical plan with a carved-out pharmacy plan. The integrated option combines the functions of claims review and payment, network access, and medical management, including utilization management, case management and disease management. The non-integrated option is similar, except the medical management function is carved out to a separate contracted vendor. Plan Year (PY) 2013 was the first year of the self-funded dental PPO plan. Schedules of premiums received and accounted for in Fund 3015, distribution by enrollment, incurred and paid medical/drug claims, and expenses related to the medical and dental plans are included within this Annual Report. Also included is a summary of premiums collected and paid for life insurance, disability insurance, vision insurance, and flexible spending accounts for Fund 3035. All data provided herein is for PY 2013 (January 1, 2013 – December 31, 2013). Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Executive Summary

During PY 2013, ADOA offered a comprehensive insurance package through Benefit
Options to over 128,000 members consisting of active state and university employees,
retirees, and their qualified dependents. The benefits offered in the package include
medical, pharmaceutical, dental, flexible spending, vision, wellness, life, and disability
insurance.

Based on the 2013 contribution strategy, the sum of health and dental premiums
collected was $810 million with total plan expenses of $804 million, resulting in a net
operational gain of $6 million.
Health Plan
• The average plan cost to insure each member was $5,302  Average active member cost was $5,033  Average retiree cost was $8,773 • The medical claims expense was $505 million of total health plan costs for 2013  The leading diagnosis category by cost was the musculoskeletal system o Just over 13% of the total medical claims cost  Claims showed members are seeking care from physicians or specialists for the majority of their medical needs, indicating appropriate care o 170 emergency room visits per 1,000 members o 221 urgent care visits per 1,000 members o 4,515 physician visits per 1,000 members • The pharmacy claims expense was $118 million of total health plan cost for 2013  The leading therapeutic drug class by cost was diabetes o 11% of the total pharmacy claims cost  1.4 million prescriptions were filled during PY 2013 o Retirees filled an average of 31 prescriptions per year o Active members averaged 10 per year
Wellness Program
• Administered over 12,600 flu vaccines through 635 worksite or public events • Administered over 6,400 screenings through 150 worksite events  590 referrals to physicians for various health issues
Performance Measures
Financial guarantees are in place to manage the performance of the contracted
vendors. Most vendors met the majority or all of the agreed-upon performance
measures. However, penalties in excess of $301,000 were collected in 2013 from a few
vendors failing to meet agreed upon PY 2012 performance targets in areas such as
customer service, claims processing, and disease management clinical improvements.

Review
The PY 2013 ratio of expenses to premiums of 99% indicates that the ADOA effectively
controlled the rise in health care costs through quality benefit design, administrative
oversight, strategic planning, auditing, and effective contract management. Detailed
evidence of ADOA's accomplishments can be reviewed herein.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Health Insurance Trust Fund Summary
Table 1 is a cash statement of receipts received and expenses paid during 2013 for PY
2013 and prior plan years.
ADOA Health Plan is the self-
Health Insurance Trust Fund Summary
funded medical program and includes Aetna, Blue Cross Blue Prior Balance December 31, 2012
Shield of Arizona administered by AmeriBen, Cigna, and ADOA Health Plan UnitedHealthcare State and university employees ADOA Dental Plan and retirees choose coverage PrePaid Dental Plan from one of the self-funded networks. BCBS (NAU) is a Total Revenues
fully-insured option available only to NAU employees and Ex penditures
Administrative Fees The Medicare Part D Retiree Drug Subsidy is available to Dental Claims employers who provide a Medicare Part D Retiree Drug Subsidy Early Retiree Reinsurance Program qualified pharmacy plan to BCBS (NAU) Premiums Medicare-eligible retirees. Dental Premiums Appropriated Expenses The Early Retiree Reinsurance Fund Transfers Out Program was instituted by the Federal Participation Reimbursement Affordable Care Act as an Total Expenditures
incentive for employers to continue health coverage for F und Balance December 31, 2013 early retirees. The 2013 expense is reimbursement to the federal government for an IBNR Liability (Medical & Dental) of subsidies Contingency Reserve (Medical & received in a prior year. Total Reserves
Reserves are monies set aside Un restricted Balance December 31,2013 $ 74,397,937.22
for the purpose of paying claims Table 1: Health Insurance Trust Fund Summary that have been incurred but not Interfund transfers from HITF to other State operating reported (IBNR) and for a funds. Future transfers include $53.9 million pursuant to contingency reserve to cover any Laws 2014, Chapter 18, Sec. 139 (HB2703 2014-2015; insufficiencies that may develop, general appropriations) for fiscal year 2015. such as actual medical trend
exceeding assumed medical trend in rate setting, shifts in plan membership,
unexpected catastrophic claims, and changes in provider reimbursement rates that may
occur in a given plan year.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Medical Plan Enrollment
The ADOA Benefit Options group medical plan is available to the following:
• Eligible State employees and university staff, officers, and elected officials; • State retirees receiving pension benefits through any of the State retirement • State employees or university staff accepted for long-term disability benefits; • Employees of participating political subdivisions; and • State employees or university staff eligible for COBRA benefits.
The three types of medical plans offered to eligible participants are the Exclusive
Provider Organization (EPO), the Preferred Provider Organization (PPO), and the
Health Savings Account Option (HSAO).
The EPO Plan
If a member chooses the EPO plan, services must be obtained from a network provider.
Out-of-network services are only covered in emergency situations. Under the EPO plan,
the employee pays the monthly premium and any required copay at the time of service.
Members selecting the EPO plan choose from four networks: Aetna, Blue Cross Blue
Shield of Arizona administered by AmeriBen*, Cigna, or UnitedHealthcare.
The PPO Plan
If a member chooses the PPO plan, services can be provided in-network or out-of-
network, but there are higher costs for out-of-network services. Additionally, there is an
in-network and out-of-network deductible that must be met. Under the PPO plan, the
employee will pay the monthly premium and any required copay or coinsurance
(percent of the cost) at the time of service. Members selecting the PPO plan choose
from Aetna, Blue Cross Blue Shield of Arizona administered by AmeriBen*, or
UnitedHealthcare.

The HSAO Plan
The HSAO plan is a high deductible health plan only available to active employees
through the Aetna network. If an employee enrolls in the HSAO, the employee is eligible
to open a Health Savings Account (HSA) which is a special type of account that allows
tax-free contributions, earnings, and healthcare-related withdrawals. If the employee
opens the Aetna associated qualifying HSA, the State makes a bi-weekly deposit to the
account.
When enrolled in the HSAO plan, members can use in-network and out-of-network
providers. Members pay the copay and/or coinsurance after the deductible is met,
except for qualified preventative services that are covered without a copay or
coinsurance.
*Blue Cross Blue Shield of Arizona Network administered by AmeriBen. Blue Cross Blue Shield of
Arizona, an independent licensee of the Blue Cross Blue Shield Association, provides Network access
only and does not provide administrative or claims payment services and does not assume any financial
risk or obligation with respect to claims. AmeriBen has assumed all liability for claims payment. No
network access is available from Blue Cross Blue Shield plans outside of Arizona.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Table 2 shows how enrollment was distributed by plan and network between active, retired, university, and COBRA members. Average Monthly Medical Enrollment by Plan & Network
Subscribers Members Subscribers Members
UnitedHealthcare Blue Cross Blue Shield** Table 2: Average Medical Enrollment by Plan & Network
*AmeriBen administering the Blue Cross Blue Shield of Arizona Network for the self-
funded Benefit Options program. **Blue Cross Blue Shield fully insured plan only
available to NAU employees and NAU retirees.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Medical Premiums

Table 3 lists the medical premium by plan and coverage tier per pay period for active
members.
Active Medical Premiums by Pay Period (26 pay periods)*
Employee
State HSA
Employee + adult Employee + child Employee + adult Employee + child Employee + adult Employee + child Table 3: Active Medical Premiums by Pay Period
*University of Arizona has 24 pay period deductions.
Table 4 lists the monthly medical premium by plan and coverage tier for both retirees not enrolled in Medicare and for those retirees who are enrolled in Medicare, or have at least one family member enrolled in Medicare. Monthly Retiree Medical Premiums
Without Medicare
With Medicare
Retiree +1 (Both Medicare) Retiree +1 (One Medicare) Family (Two Medicare) Retiree +1 (Both Medicare) Retiree +1 (One Medicare) Family (Two Medicare) Table 4: Monthly Retiree Medical Premiums
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Medical Premium vs. Plan Cost

The 2013 contribution strategy for the self-insured medical plan resulted in employees
paying 11% of the average monthly total premium, while the State paid the remaining
89%.
The figure below shows how the average monthly premium compared to the average
monthly plan cost for active and retired members.
Average Monthly Medical Premium and Plan Cost per Member
Figure 1: Average Monthly Premium & Plan Cost per Member
*2012 Premiums are net of the legislatively mandated Premium Holiday Pursuant to A.R.S. §38.651.01(B.), retiree and active medical expenses shall be grouped together to "obtain health and accident coverage at favorable rates." This requirement results in retiree premiums lower and active premiums higher than what their experiences would otherwise dictate. Health Insurance Trust Fund
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Annual Report
December 31, 2013
Expenses for Self-Funded Medical Plans

The tables below show the distribution of claims and expenses incurred in PY 2013, and
the average annual cost to insure each type of subscriber/member.
Self-funded Medical Expenses by Active, Retiree, and Plan
Expenses
Medicare Part D Subsidy ERRP Reimbursement Rebates & Recoveries Administration Fees Appropriated Expenses 96,800,000 84,999,055 11,800,945 92,262,990 4,268,238 $661,941,692 $583,030,417 $78,911,275 $630,460,120 $29,039,772 $2,441,799 Enrollment in self-funded plans
Subscribers
Annual cost
Per subscriber
$ 11,561 $ 11,598 $ 11,298 $ 11,585 $ 12,819 $ 4,297 $ 5,302 $ 5,033 $ 8,773 $ 5,264 $ 7,213 $ 2,318 Table 5: Self-funded Expenses by Active, Retiree, & Plan

Self-funded Medical Expenses by Plan for Active & Retiree
Expenses (in dollars)
Medicare Part D Subsidy ERRP Reimbursement Rebates & Recoveries Administration Fees Appropriated Expenses 96,800,000 80,936,815 3,793,468 268,772 11,326,174 $661,941,692 $554,701,913 $25,886,705 $ 2,441,799 $75,758,207 $3,153,067
Enrollment in self-funded plans
Subscribers
Annual cost
Per subscriber
$ 11,561 $ 11,632 $ 12,857 $ 4,297 $ 11,252 $ 12,516 $ 5,302 $ 4,994 $ 6,961 $ 2,318 $ 8,721 $ 10,265 Table 6: Self-funded Expenses by Plan for Actives & Retirees
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Medical Expenses Associated with Medical Diagnoses
Table 7 shows how medical expenses were distributed among different diagnoses.
More dollars were spent treating conditions related to the musculoskeletal system than
any other diagnosis.
Medical Expenses by Diagnosis for Actives & Retirees
Retirees
Retirees
Diagnosis
Musculoskeletal System and Connective Tissue Supplementary Classification of Factors Influencing Health Status and Contact With Health Service Symptoms, Signs, and Ill-Defined Conditions Injury and Poisoning Circulatory System Digestive System Genitourinary System Nervous System and Sense Organs Respiratory System Pregnancy, Childbirth, and The Puerperium Endocrine, Nutritional and Metabolic Diseases, and Immunity Disorders Mental Disorders Infectious and Parasitic Diseases Skin and Subcutaneous Tissue Blood and Blood-Forming Organs Congenital Anomalies Certain Conditions Originating in the Perinatal Period Supplementary Classification of External Causes of Injury and Poisoning Table 7: Medical Expenses by Diagnosis for Actives & Retirees
Note: Some statistics may vary slightly from previous annual reports due to the late receipt of
program data following the completion of the previous annual report. In no case does the variation
represent a substantive change in trend or comparative values.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Hospital Care
Inpatient hospital care represents a significant portion of total medical expenses: 35%
for active members and 32% for retired members. The figures below show a
comparison of hospital admissions and the average length of stay for active and retired
members and EPO, PPO, and HSAO members.
Hospital Admissions per 1,000 Members
Figure 2: Hospital Admissions per 1,000 Members
Inpatient Average Length of Stay
Figure 3: Inpatient Average Length of Stay
Note: Mental health, substance abuse, and maternity admissions are included.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Hospital Care (continued)
The figures below show how active/retired members and EPO/PPO/HSAO members
compared statistically in number of hospital days and average cost per admission. As a
group, retirees spent 4.4 times as many days in the hospital as active members. While
the plan pays less for Medicare enrolled retiree admissions than for active admissions,
the total cost of retiree admissions is 2 times higher than the cost of active admissions
when all sources of insurance are considered.
Inpatient Days per 1,000 Members
Figure 4: Inpatient Days per 1,000 Members
Average Cost per Admission
insurance Medicare, and Other Insurance Figure 5: Average Cost per Admission
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Emergency Room Visits
During PY 2013, there were approximately 170 emergency room visits per 1,000
members of the self-funded plan. The average plan cost per emergency room visit was
$1,320. This cost is indicative of proper utilization of emergency room visits. These
figures include facility claims and professional fees.
Urgent Care Visits
During PY 2013, there were approximately 221 urgent care visits per 1,000 members of
the self-funded plan. The average plan cost per urgent care visit was $91.
Physician Visits
During PY 2013, there were approximately 4,515 physician visits per 1,000 members
(or each member of the self-funded plan visited a physician approximately 4 times). The
average plan cost per office visit cost was $89.
Figures 6 and 7 show how total active and retiree medical expenses were distributed by
type of care. Emergency room care for active employees was 4.8% of medical
expenses, compared to 1.97% of medical expenses for retired members.
Active Employee Medical Expense by Place of Service
Inpatient Hospital Outpatient Hospital Ambulatory Surgical Independent Laboratory Urgent Care Facilty Figure 6: Active Medical Expense by Place of Service
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Retiree Medical Expense by Place of Service
Inpatient Hospital Outpatient Hospital Ambulatory Surgical Independent Laboratory Urgent Care Facilty Figure 7: Retiree Medical Expense by Place of Service
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Annual Prescription Use
Figure 8 compares the average number of prescriptions filled by active and retired
members for PY 2012 and PY 2013.
Average Number of Prescriptions by Member per Year
Figure 8: Average Number of Prescriptions per Year
Figure 9 compares pharmacy expense per utilizer by age for PY 2012 and PY 2013. Pharmacy Expense per Utilizer per Year
Figure 9: Pharmacy Expense per Utilizer per Year
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Generic and Brand-Name Prescription Use
Table 8 shows how total pharmacy expenses were distributed among generic,
preferred, and non-preferred types of drugs.
Total Prescriptions by Tier
Tier 1 Generic ($10 copay) Tier 2-Preferred ($20 copay) Tier 3-Non-Preferred ($40 copay) 1,410,330 100.0% 1,423,298 100.0% Table 8: Total Prescriptions by Tier
Prescription Use by Therapeutic Class
Table 9 shows the 10 most utilized classes of drugs according to total expense. More
dollars were spent on diabetes than any other therapeutic class.
Pharmacy Top Therapeutic Classes by Total Plan Paid
Therapeutic class
Plan Paid
Plan Paid
13,843,844 10.90% 12,099,557 10.00% Inflammatory Disease Behavioral Health - Other Cardiovascular Disease - Lipid Neoplastic Disease Pain Management - Analgesics Neurological Disease - Miscellaneous Infectious Disease - Viral Cardiovascular Disease - Hypertension Behavioral Health - Antidepressants 60.01% $ 75,580,861 Table 9: Pharmacy Top Therapeutic Classes by Plan Paid
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Prescription Use by Type of Drug
Table 10 shows the 10 most utilized drugs according to total expense. Humira is the
leading prescription by cost for PY 2013.
Top Ten Drugs by Total Plan Paid
Drug Name
Plan Paid
Percent Drug Name
Plan Paid
1.26% Atorvastatin Calcium $ 22,296,466 17.56% Total $ 22,172,031 18.33% Table 10: Top Ten Drugs by Total Plan Paid
Note: Some statistics may vary slightly from previous annual reports due to the late receipt of
program data following the completion of the previous annual report. In no case does the
variation represent a substantive change in trend or comparative values.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Dental Plan Enrollment
ADOA Benefit Options offers two different types of dental plans: a fully-insured dental
health maintenance organization (DHMO) plan provided by Total Dental Administrators
and a self-funded dental preferred provider organization (DPPO) plan administered by
Delta Dental.
DHMO Plan – Total Dental Administrators (TDA)
Key components of DHMO plan include:
• Seeing a participating dental provider (PDP) to provide and coordinate all dental • No annual deductible or maximums ($200.00 maximum reimbursement for non- contracted emergency services) under Total Dental Administrators; • $1,500 per person lifetime for orthodontia; and • No claim forms (except for emergency services).
DPPO Plan – Delta Dental
Key components of the self-funded DPPO plan include:
• Members may see any dentist. Deductible and/or out-of-pocket payments apply; • A maximum benefit of $2,000 per person per plan year for dental services; • $1,500 per person lifetime for orthodontia; • May need to submit a claim form for eligible expenses to be paid; and • Benefits may be based on reasonable and customary charges. Table 11 shows how active employee and retiree dental enrollments were distributed among plans. Average Monthly Dental Enrollment by Plan
Plan Type
Subscribers
Subscribers
Total Dental Administrators Table 11: Average Dental Enrollment by Plan
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Dental Premiums

Table 12 shows the active employee dental premiums per pay period.
Active Dental Premiums per Pay Period (26 pay periods)*
Employee
Employee + adult Employee + child Employee + adult Employee + child Table 12: Active Dental Premiums

Table 13 shows the retiree monthly dental premiums.

Retiree Monthly Dental Premiums
Plan
Employee + adult Employee + child Employee + adult Employee + child Table 13: Retiree Dental Premiums
Dental Premium vs. Plan Cost
The 2013 contribution strategy for the dental plans resulted in employees paying 85% of
the average monthly total premium, and the State paying the remaining 15%.
Figure 10, on page 22, shows how the average monthly premiums compared to the
average monthly cost for active and retired members.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Average Monthly Dental Premium and Plan Cost per Member
(Self-funded DPPO Plan)
Active Premium Active Plan Cost Retiree Premium Figure 10: Average Dental Premiums & Expenses per Member
Expenses for Self-funded Dental Plan

The table below shows the distribution of dental claims and expenses incurred in PY
2013, and the average annual cost to insure each type of subscriber/member.
Self-funded Dental Expenses by Active, Retiree
Expenses
Rebates & Recoveries Administration Fees 1,096,017 312,593 Appropriated Expenses $ 225,058 $ 7,600,000 5,913,439 1,686,561 $40,081,463 $31,186,749 $8,894,714 Enrollment in self-funded plans
Subscribers
Annual cost
Per subscriber
Table 14: Self-funded Dental Expenses by Active & Retiree
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Wellness
ADOA Benefit Options Wellness provides services to State employees, retirees, and
covered dependents as part of the benefits package. Members have access to
preventive health screenings, health management and health education courses,
annual flu vaccines, online stress management seminars, and Employee Assistance
Program (EAP) benefits.
Table 15 shows the total utilization of the health screening benefit during PY 2013 and
the number of at-risk employees referred for follow-up care.
PY 2013 Screenings
Referrals
Mini Health Screening*
Osteoporosis Screening** Prostate Specific Antigen (PSA)** Facial Skin Analysis** Mobile Onsite Mammography
Prostate Onsite Projects
Table 15: PY 2013 Wellness Screenings
* The basic Mini Health Screening includes; full lipid panel, fasting blood glucose,
blood pressure, BMI, and body composition.
** Optional tests offered as a package with the basic Mini Health Screening.
*** Participants are not unique.
Table 16 shows the total utilization of the 2013 Annual Flu Vaccine Program held October through December. Wellness provided a total of 12,624 vaccines to employees and dependents who met eligibility requirements. Members had access to the flu vaccine at a total of 635 locations, both at the worksite and at publicly held clinics. This is almost double the amount of total flu vaccine locations that were available in 2012. A total of 95.9% of members who received a flu vaccine did so at a worksite location, and 10,497 flu shot recipients held active employee status. PY 2013 Flu Vaccines
Locations Participants
State Agency Worksite University Worksite Combined Worksite (Wesley Bolin) Open Enrollment Clinics Table 16: PY 2013 Flu Vaccines
Table 17, on page 24, shows the utilization of the Employee Assistance Program (EAP) and support services offered to agencies covered under the Arizona Department of Administration. Total utilization for 2013 reached over 32%, showing sustained high usage especially when compared to the 17.5% national standard for government entities. ADOA covered agencies continue to show utilization higher than our EAP Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
vendor's Book of Business, and has seen a consistent increase in the past 5 years from 19% in 2009 to 32% in 2013. PY 2013 EAP Utilization
Eligible
Utilization
Population
Live Telephonic Access
FinancialConnect On-line Access
FinancialConnect Health & Wellness Critical Incident Stress Debriefing
Trainings
Overall Utilization Table 17: PY 2013 Employee Assistance Program Utilization
In addition to health screenings, vaccines, and EAP services, the PY 2013 Wellness strategic plan provided employees access to online mindfulness and stress reduction opportunities through a first-year pilot with eMindful, Inc. The purpose of the pilot was to gain feedback from members regarding the online platform and program details in order to better serve them with this new type of wellness programming. Overall feedback of eMindful and its programming was positive and this contract continues in 2014. Table 18 shows the class series held during PY 2013 and total participation. PY 2013 Health Management Courses
On-Line Courses:
Mindfulness at Work (12 weeks) Table 18: PY 2013 Health Management Courses
The Wellness strategic plan continues to progress as scheduled. Wellness achievements for PY 2013 included, most notably, an increased EAP utilization, implementation of the eMindful contract and web-based wellness programming for all State employees, initiation of a new onsite health education class contract to address various health needs of employee groups, and increased offerings of flu clinics to eligible recipients throughout the State, making this benefit even more accessible to employees in rural areas. Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Life, Disability, Vision Insurance, and Flexible Spending
Accounts Premiums
Fund 3035, ERE/Benefits Administration, is used to pay insurance premiums and
administer State employee benefit plans other than health and dental. Vision,
supplemental, dependent, and short-term disability insurance, and flexible spending are
funded solely by employee premiums. Basic life and non-ASRS long-term disability
insurance are funded solely by employer premiums. Fund 3035 is primarily a pass-
through fund with collections funding the insurance vendor premium payments.
ERE/Benefits Administration Fund Summary
Prior Balance December 31, 2012
$ 3,410,911.15
$ 35,250,346.13
Insurance Product
Supplemental Life Short Term Disability Long Term Disability Total Life & Disability Health Care FSA Dependent Care FSA Total Flex Spending To tal Revenues
Ex penditures
$ 34,929,454.47
Insurance Product
Penalties
Supplemental Life Short Term Disability Long Term Disability Total Life & Disability* Health Care FSA Dependent Care FSA Administrative Fees* Total Flex Spending To tal Expenditures
(2,985.54) 34,929,454.47 En ding Balance December
$ 3,731,802.81
Table 19: ERE/Benefits Administration Fund Summary
*Vendor administrative fees and fully insured premiums are paid 55 days in arrears per contract.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Vendor Performance Standards

Pursuant to A.R.S. § 38-658(B), "On or before October 1 of each year, the Director of
the Department of Administration shall report to the Joint Legislative Budget Committee
on the performance standards for health plans, including indemnity health insurance,
hospital and medical service plans, dental plans, and health maintenance
organizations."
Among the terms of the self-funded health insurance contracts and other contracts for
the Benefit Options program are a number of ADOA-negotiated performance measures
with specific financial guarantees tied to vendor performance of the contracted services.
If a vendor fails to meet any of the measures within the specified performance range,
the vendor is required to submit a Corrective Action Plan detailing why the measure was
missed and any actions taken to address the issue and improve performance to meet
the standard of the measure. A percentage of the vendor's annual payment, or
previously agreed upon amount, is then withheld by ADOA as a performance penalty
per the terms of the vendor contract. This percentage is allocated among the more
critical measures of the contract.
The following is a report of the agreed-upon performance standards both met and
missed by contracted vendors during PY 2013. In each case, performance penalties for
measures missed are assessed per the terms of the individual vendor contract.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Successfully Met Performance Measures
Fees At Risk
Performance Measure
23.00% of Total Administrative Fee Customer Service - 63 of 72 targets Claims Adjudication - 52 of 60 targets Appeals, Open Enrollment, Administration, Reporting, Medicare Administration & Survey – all 98 targets 16.50% Medical Management Fee Disease Management - 16 of 20 targets, pending results on 1 target Medical Management – all 6 targets 3.50% Case Management Fee Case Management – 1 target Performance Measures Not Met
Percent of
Total Percent Assessed
Performance Measure
Fees at Risk
Based on Reporting
Frequency
Missed 3 months of 12 Customer Service: average speed to answer call <30 months measured = 0.25% Missed 5 months of 12 Customer Service: first call resolution 90% or greater. months measured = 0.42% Missed 1 month of 12 Customer Service: 97% telephone call quality. months measured = 0.08% Missed 1 month of 12 Claims Adjudication: 98% of all fully documented claims months measured = 0.04% received will be processed within 30 calendar days Missed 4 months of 12 Claims Adjudication: 98.2% of claims dollars submitted for months measured = 0.33% payment will be accurately processed and paid. Missed 3 months of 12 Claims Adjudication: 96% of all claims will be processed months measured = 0.25% Missed 2 of 2 semi-annual Disease Management: clinical improvements for each measurements = .75% program will be agreed to and monitored; CAD/PAD members have had their cholesterol monitored in the past 12 months, up to a 75% target. Missed 2 of 2 semi-annual Disease Management: clinical improvements for each measurements = .75% program will be agreed to and monitored; Post myocardial infarction (MI) Post-MI members using beta blockers in the past 12 months up to a 75% target. Vendor Performance Measures 1: Aetna

Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Successfully Met Performance Measures
Fees At Risk
Performance Measure
15.20% of Total Administrative Fee Customer Service - 70 of 72 targets Appeals – 33 of 36 targets Reporting – 28 of 29 targets Claims Adjudication - 47 of 48 targets, pending results on 1 target Open Enrollment, Administration & Survey - all 38 targets 7.00% Medical Management Fee Medical Management – all 16 targets 8.00% Case Management Fee Case Management – all 12 targets 7.00% Disease Management Fee Disease Management – all 24 targets 5.00% Nurse Line Fee Nurse Line – 10 of 12 targets Performance Measures Not Met
Percent of
Total Percent Assessed
Performance Measure
Fees at Risk
Based on Reporting
Frequency
Missed 2 months of 12 Customer Service: contractor will respond to 95% or more months measured = 0.04% of all routine customer service telephone inquiries within 5 calendar days. Missed 1 month of 12 Appeals: 100% of written appeals resolved in 15 calendar months measured = 0.03% days after receipt of participant's request for review in the case of pre-service claims. Missed 2 months of 12 Appeals: 100% of written appeals resolved in 45 calendar months measured = 0.05% days after receipt of participant's request for review in the case of post-service claims. Missed 1 month of 12 Reporting: contractor will deliver its monthly reports to the months measured = 0.03% ADOA within 30 calendar days from the end of the month. Missed 1 month of 12 Claims Adjudication: 97% of all claims will be process months measured = 0.04% accurately. Accurate processing includes payment amount; communication to claimant or provider; data entry errors affecting current or future benefit determinations and management reports. Missed 2 quarters of 4 Nurse Line: abandonment rate <5%. quarters = 1.25% Vendor Performance Measures 2: Cigna

Successfully Met Performance Measures
Fees At Risk
Performance Measure
18.55% of Total Administrative Fee Claims Adjudication - 59 of 60 targets Customer Service, Appeals, Reporting, Open Enrollment, Administration & Survey - all 164 targets 6.50% Medical Management Fee Medical Management – all 13 targets 8.50% Case Management Fee Case Management – all 16 targets 5.00% Disease Management Fee Disease Management – all 22 targets 5.00% Nurse Line Fee Nurse Line - all 12 targets Performance Measures Not Met
Percent of
Total Percent Assessed
Performance Measure
Fees at Risk
Based on Reporting
Frequency
Missed 1 month of 12 Claims Adjudication: 99.3% of claims dollars submitted for months measured = 0.17% payment will be accurately processed and paid. Vendor Performance Measures 3: UnitedHealthcare

Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
AmeriBen
Successfully Met Performance Measures
Fees At Risk
Performance Measure
15.00% of Total Administrative Fee Customer Service – 71 of 72 targets Administration – 27 of 28 targets Claims Adjudication – 59 of 60 targets Appeals, Open Enrollment, Reporting, Survey & Medicare Administration – all 68 targets Performance Measures Not Met
Percent of
Total Percent Assessed
Performance Measure
Fees at Risk
Based on Reporting
Frequency
Missed 1 month out of 12 Customer Service: contractor will acknowledge all months measured = 0.01% correspondence (inquiries and requests) within 2 working days and resolve 95% or more within 30 calendar days of receipt. Missed 1 month out of 12 Administration: contractor will mail appropriate plan months measured = 0.04% descriptive material to participants within 2 calendar days of receiving a request. Missed 1 month out of 12 Claims Adjudication: processing of a claim will be months measured = 0.06% completed when it has been approved for payment, denied or pended with a request for further information. 97% of all fully documented claims received will be completely processed within 10 calendar days after they are received. Vendor Performance Measures 4: AmeriBen

American Health Holding
Successfully Met Performance Measures
Fees At Risk
Performance Measure
21.00% of Total Administrative Fee Reporting – 24 of 25 targets Implementation, Systems & Survey - all 19 targets 5.00% of Disease Management Fee Disease Management – all 16 targets 10.00% of Case Management Fee Case Management – all 16 targets 10.00% of Preadmission Certification Fee Utilization Management – 2 targets 5.00% of Nurse Line Fee Nurse Line - all 12 targets Performance Measures Not Met
Percent of
Total Percent Assessed
Performance Measure
Fees at Risk
Based on Reporting
Frequency
Missed 1 month of 12 Reporting: contractor will submit monthly reports within 15 months measured = 0.08% calendar days following the end of the reported month. Vendor Performance Measures 5: American Health Holding

MedImpact
Successfully Met Performance Measures
Fees At Risk
Performance Measure
Fixed Amounts Totaling $1,500,000 Network Management, Eligibility, Claims/Paper, Claims/Mail Order, Customer Service, Survey, Account Management, Implementation, Reporting & Generic Substitution/Utilization - all 112 targets Performance Measures Not Met
Fees At Risk
Total Amount Assessed
Performance Measure
Based on Reporting
Frequency
No measures missed Vendor Performance Measures 6: MedImpact

Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Delta Dental
Successfully Met Performance Measures
Fees At Risk
Performance Measure
28.92% of Total Administrative Fee Account Management, Administration, Appeals, Claims Adjudication, Customer Service, Open Enrollment, Network Management, Reporting & Satisfaction – all 258 targets Fixed Amounts Totaling $50,000 Implementation – all 4 targets Performance Measures Not Met
Percent of
Total Amount Assessed
Performance Measure
Fees At Risk
Based on Reporting
Frequency
No measures missed. Vendor Performance Measures 7: Delta Dental

Total Dental Administrators
Successfully Met Performance Measures
Fees At Risk
Performance Measure
15.50% of Total Premiums Paid Customer Service – 46 of 48 targets Account Management, Administration, Appeals, Implementation, Open Enrollment, Network Management & Reporting – all 87 targets Performance Measures Not Met
Percent of
Total Amount Assessed
Performance Measure
Fees At Risk
Based on Reporting
Frequency
Missed 2 months of 12 Customer Service: average speed to answer call <=30 months measured = 0.04% Missed 1 of 1 annual Satisfaction: no less than 80% overall member satisfaction on annual survey. Vendor Performance Measures 8: Total Dental Administrators

ComPsych
Successfully Met Performance Measures
Fees At Risk
Performance Measure
17.00% of Total Administrative Fee Customer Service – 19 of 20 targets Reporting, Program Administration & Survey – all 18 targets Performance Measures Not Met
Percent of
Total Percent Assessed
Performance Measure
Fees at Risk
Based on Reporting
Frequency
Missed 1 quarter of 4 Customer Service: member call abandonment Rate <3% quarters measured = 0.75% Vendor Performance Measures 9: ComPsych

Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Successfully Met Performance Measures
Fees At Risk
Performance Measure
Fixed Amounts Totaling $84,333.32 Call Center - met 34 of 36 targets Implementation, Reporting, Network Management, Claims Administration, Appeals & Survey - all 79 targets Performance Measures Not Met
Fees At Risk
Total Amount Assessed
Performance Measure
Based on Reporting
Frequency
Missed 2 month out of 12 Call Center: 90% of all calls requesting a member services months measured = representative will be answered in 30 seconds or less. Vendor Performance Measures 10: Avesis

Application Software Inc. (ASI)
Successfully Met Performance Measures
Fees At Risk
Performance Measure
33.10% of Total Administrative Fees Administration – 6 of 8 targets Claims Adjudication – met 15 of 16 targets Customer Service, Reporting & Implementation – all 25 targets Performance Measures Not Met
Percent of
Total Percent Assessed
Performance Measure
Fees at Risk
Based on Reporting
Frequency
Missed 2 quarters of 4 Administration: contractor will distribute materials to quarters measured = participants within 5 calendar days. Missed 1 quarter of 4 Claims Adjudication: 100% of claims will be processed quarters measured = within five working days. Vendor Performance Measures 11: Application Software Inc.

The Hartford
Successfully Met Performance Measures
Fees At Risk
Performance Measure
7.28% of Total Premiums Paid Financial Payment – 11 of 12 targets Report Timeliness – 15 of 17 targets Implementation, Survey, Quality of Service, Appeals & Claimant Notification – all 75 targets 1.25% of Total STD Premiums Paid Short Term Disability Processing – all 36 targets 0.50% of Total LTD Premiums Paid Long Term Disability Processing – all 2 targets 1.00% of Total Life Premiums Paid Life Claims Processing – all 13 targets Performance Measures Not Met
Percent of
Total Percent Assessed
Performance Measure
Fees at Risk
Based on Reporting
Frequency
Missed 1 month out of 12 Financial Payment: maintain accuracy of 98% (defined as months measured = 0.02% the total paid dollars) reviewed minus the sum of the errors identified divided by the total paid claim dollars audited, expressed as a percentage. Missed 2 months out of 12 Report Timeliness: contractor will submit monthly reports months measured = 0.03% within 30 calendar days after the close of month. Vendor Performance Measures 12: The Hartford
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Audit Services
The Audit Services Unit provides assurances that add value to and improve the
operations of the Human Resource Division (HRD). Audit Services performs systematic
evaluations of contract compliance, operational controls, risk management, and the
implementation of best practices to support HRD objectives.
During PY 2013, 33 audit projects were completed to ensure the Benefit Options
vendors provided contracted services appropriately. The audit schedule for PY 2013
was developed using a combination of contract elements and risk analysis. The 33 audit
projects resulted in 23 recommendations, 17 of which were fully implemented by the
end of the year, and resulted in $143,574.17 of identified recoverable overpayments.
Individual audit objectives were developed with the consideration of dollar value,
complexity of operations, changes in personnel or operations, loss exposure, and
previous audit results.
Table 20 is a summary of the functional areas in which audits were completed and the
corresponding audit methodology.
Audit Services Summary
Functional Area
Audit Methodology
Vendor operating transactions Statement on Standards for Attestation Engagements No. 16 Audits ("SSAE 16") Evaluation of external audit results Vendor execution of benefit design and Plan Implementations contract elements Plan Allowances/Exclusions ("A&E") Plan Authorizations Claims adjudication compliance Inquiries (i.e., research, plan coverage design, etc.) ADOA accuracy of shared data Dependent Eligibility Audit (DEA) Audit program improvement initiatives Performance Guarantees Quality management standards Vendor Report Card Administrative functions and program-specific improvements Table 20: Audit Services Summary

Vendor Operating Transactions
All Benefit Options contracted vendors that pay claims are required to provide a copy of
an SSAE 16, which is an independently assessed operational annual audit. SSAE 16
audits evaluate the internal control of the vendor's systems utilized to adjudicate claims
and identify deficiencies. Audit Services reviewed the SSAE 16 reports provided by
each of the vendor's external auditors. There were no instances of significant operating
failure noted and no corrective action was required. In addition, audits performed by
external or third party vendors were evaluated and considered for the development of
the audit schedule when there is significant impact on the Benefit Options program and
contract compliance (i.e. large medical and/or pharmacy claims audit).
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Vendor Execution of Benefit Design and Contract Elements
Plan implementation audits are completed annually for new, deleted, or revised plan
design elements. Implementation audits are designed to measure compliance with new
and/or revised plan elements as they are executed at the start of a new plan year. Plan
elements may include revisions to language in the plan document, vendor system edits
(claim adjudication), plan allowances/limitations, internal controls, etc. Audit results for
2013 indicated that, in some cases, claims for compression garments, wigs/hair pieces,
and amino acid based formulas were not adjudicated properly. Additionally, some
thresholds were not applied to hearing aids and durable medical equipment. Estimated
recoverable overpayments of $13,318.79 were identified.
Plan allowance/exception (A&E) audits are designed to evaluate whether the contracted
vendors' systems were set up correctly in compliance with Benefit Options' plan design.
A&E audit findings for PY 2013 indicated that plan limitations and restrictions were
processed accurately and members received the benefits allowed to them as defined in
the plan description with the exception of two coverage elements. Chiropractic
allowance and excluded biofeedback treatment were erroneously adjudicated. Impact
reports identified recoverable overpayments of $2,347.20.
Plan authorization reviews are conducted to ensure contracted vendors implement
operational changes, language revisions, and claim payment exceptions in an accurate
and timely manner. A plan authorization is an agreement between ADOA and the
contracted vendor to revise a process or operating standard and may be initiated by
either party. Results for 2013 indicated that plan authorizations were correctly
implemented and no corrective action was required.
Claims adjudication compliance audits are performed to evaluate the contracted
vendors' adherence to regulatory guidelines, current operating standards, contractual
elements, vendor performance, and/or plan authorization documents. During PY 2013,
an end-stage renal disease (ESRD) audit was conducted to follow up the initial
evaluation completed in 2012 of the medical vendors' accuracy of primary and
secondary payer status. The follow up audit identified $127,908.18 of recoverable
overpayments.
ADOA Accuracy of Shared Data
Dependent eligibility audits are performed annually on the Benefit Options program
membership. The eligibility audits provide assurance that dependent eligibility is
monitored effectively and the risk of claims paid on behalf of ineligible dependents
minimized. The results of the 2013 eligibility audit indicated 2 ineligible individuals
enrolled in the plan and who were receiving benefits erroneously due to system
limitations. Additionally, 2 different dependents received benefits due to unreported or
untimely filing of qualified life events. Finally, 6 dependents who received benefits were
removed from the plan because the subscribers did not provide documentation
supporting their dependent statuses.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Appendix
Table A: Special Employee Health Fund Cash Statement
Prior Balance December 31, 2012
$ 276,902,422.88 Revenues
$ 810,147,182.95 ADOA Health Plan (EE) ADOA Health Plan (ER) BCBS NAU Plan (EE) BCBS NAU Plan (ER) ADOA Dental Plan (EE) ADOA Dental Plan (ER) PrePaid Dental Plan (EE) PrePaid Dental Plan (ER) 0.00 810,147,182.95 $ 803,851,668.61 AHH Medical Management UnitedHealthcare AG Collection Fees Net Administrative Fees*** UnitedHealthcare Medicare Part D Retiree Drug Subsidy Early Retiree Reinsurance Program Self-Insured Expenditures 681,806,609.19 Total Dental Administrators Fully Insured Expenditures*** 39,050,690.75 (9,314.08) 39,041,376.67 Fund Transfers Out Federal Participation Reimbursement NET EXPENDITURES 813,899,287.27 (10,047,618.66) Fund Balance December 31, 2013
$ 283,197,937.22 IBNR Liability (Medical & Dental)
$ 104,400,000.00 Contingency Reserve (Medical & Dental)
$ 104,400,000.00 Unrestricted Cash Balance As Of December 31, 2013
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
*Recoveries include prescription drug rebates, overpayment recoveries (including stop payments and voids), subrogation recoveries, etc. **Other Fees include HSA Administration, surcharges by other states (MA, MI, NYHCR), and legal fees. ***Vendor administrative fees and fully insured premiums are paid 55 days in arrears per contract. Interfund transfers from HITF to other State operating funds. Future transfers include $53.9 million pursuant to Laws 2014, Chapter 18, Sec. 139 (HB2703 2014-2015; general appropriations) for fiscal year 2015. Glossary of Terms

Active member(s) – An employee and their eligible dependents, as defined in the
Arizona Administrative Code, who are enrolled in one of the health plan options offered
by the State. (Also referred to as "actives")
Administrative fees – Fees paid to third-party vendors for plan administration, network
rental, transplant network access fees, shared savings for negotiated discounted rates
with other providers, COBRA administration, direct pay billing, additional reporting
billing, State fees (MA, MI and NY), and bank reconciliation fees.

Case management – A collaborative process that facilitates recommended treatment
plans to ensure that appropriate medical care is provided to disabled, ill, or injured
individuals.

Claim – A provider's demand upon the payer for payment for medical services or
products.

Claim appeal – A request by an insured member for a review of the denial of coverage
for a specific medical procedure contemplated or performed.

COBRA, Consolidated Omnibus Budget Reconciliation Act of 1985 – A federal law
that requires an employer to allow eligible employees, retirees, and their dependents to
continue their health coverage after they have terminated their employment or are no
longer eligible for the health plan - COBRA enrollees must pay the total contribution, in
addition to an administrative fee of 2%.

Contribution strategy – A premium structure that includes both the employer's
financial contribution and the employee's financial contribution towards the total plan
cost.

Copayment – A form of medical cost-sharing in the health plan that requires the
member to pay a fixed dollar amount for a medical service or prescription.

Deductible – A fixed dollar amount that a member pays during the plan year, before the
health plan starts to make payments for covered medical services.

Dependent – An unmarried child or a spouse of the employee who meets the
conditions established by the relevant plan description.
DHMO/Pre-Paid Dental – A dental plan that offers members dental services with no
annual maximums or claim forms, and services based on a discounted rate. Total
Dental is the current prepaid dental vendor.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013

DPPO – A dental plan, with an in-network and out-of-network coinsurance structure,
that allows members to visit any dentist. There is an annual deductible, and maximum
annual benefit of $2,000 per member per year for dental services. The current
administrator for the DPPO plan is Delta Dental.

Disease management – A comprehensive, ongoing, and coordinated approach to
achieving desired outcomes for a population of patients. These outcomes include
improving members' clinical conditions and qualities of life as well as reducing
unnecessary healthcare costs. These objectives require rigorous, protocol-based,
clinical management in conjunction with intensive patient education, coaching, and
monitoring.

Eligibility appeal – The process for a member to request a review of a health plan
decision regarding a claimant's qualifications for, or entitlement to, benefits under a
plan.
Employee – As defined in the Arizona Administrative Code who works for the State of
Arizona or a State university.

Exclusive Provider Organization (EPO) – A health plan designed with an exclusive
provider organization or network. Enrollees are limited to access in-network providers
and are subject to co-pays. Any exceptions require prior authorization.

Flexible spending account (FSA) – An account that can be set up through the State's
Benefit Options program, an FSA allows an employee to set aside a portion of his/her
earnings to pay for qualified medical and dependent care expenses. Money deducted
from an employee's pay and put into an FSA is not subject to

Formulary – A list of preferred medications covered by the health plan. The list
contains generic and brand-name drugs. The most cost-effective brand-name drugs are
placed in the "preferred" category and all other brand-name drugs are placed in the
"non-preferred" category.
Fully-insured – An insurance model wherein a commercial insurer collects premiums,
pays claims for services, and takes the risk of revenue to expense. Benefit Options
may collect the premiums for transfer to the commercial insurer.

Health Savings Account Option (HSAO) – An account that allows individuals to pay
for current health expenses and save for future health expenses on a tax-free basis.
Only certain plans are HSA-eligible.
Integrated – A health plan operation administered by one entity. Such operations
include: claims processing and payment, a network of medical providers, utilization
management, case management, and disease management services.

Medicare – The federal health insurance program provided to those who are age 65
and older, or those with disabilities, who are eligible for Social Security benefits.
Medicare has four parts: Part A, which covers hospitalization; Part B, which covers
physicians and medical providers; Part C, which expands the availability of managed
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
care arrangements for Medicare recipients; and Part D, which provides a prescription
drug benefit. Retirees signing up for ADOA insurance must enroll in Parts A and B, but
not C or D.
Member – A health plan participant. This individual can be an employee, retiree,
spouse, or dependent.

Network – An organization that contracts with providers (hospitals, physicians, and
other health care professionals) to provide health care services to members. Contract
terms include agreed upon fee arrangements for services and performance standards.

Non-integrated – A health plan with operations administered by multiple entities.
These operations include claims processing and payments, a network of medical
providers, and disease management services.

Payer – The entity responsible for paying a claim.

Pharmacy benefit manager – An organization that provides a pharmacy network,
processes and pays for all pharmacy claims, and negotiates discounts on medicines
directly from the pharmaceutical manufacturers. These discounts are passed to the
employer/payer in the form of rebates and reduced costs in the formulary.
Plan year – Defined as the period of January 1 through December 31 of a given year.

Preferred Provider Organization (PPO) – A health plan designed with a preferred
provider organization or network. Enrollees have access to in-network and out-of-
network providers, and are subject to co-pays, or co-insurance, and annual deductibles.
Out-of-network providers require greater copays.

Premium – The agreed-upon fees paid for medical insurance coverage. Premiums are
paid by both the employer and the health plan member.

Retiree – A former State of Arizona employee, State university employee, officer, or
elected official who is retired under a State-sponsored retirement plan. For reporting
purposes, this term encompasses both actual retirees and their dependents.

Self-funded – An insurance program wherein Benefit Options collects premiums, pays
claims, and assumes the risk of revenues to expenses.

Self-insured – A plan that is funded by the employer who is financially responsible for
all medical claims and administrative expenses.

Spouse – A dependent legally married to an employee or a retiree, as defined by the
Arizona Revised Statutes.

Stop-loss – A form of insurance for self-insured employers that limits the amount that
the employer, as primary insurer, will pay for medical expenses.

Subscriber – An employee, officer, elected official, or retiree who is eligible and enrolls
in the health plan.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013

Third party administrator – An organization that handles all administrative functions of
a health plan including: processing and paying claims, compiling and producing
management reports, and providing customer service.
Utilization management – The evaluation of appropriateness and efficiency of health
care services procedures and facilities according to established criteria or guidelines
and under the provisions of an applicable health benefits plan.

Utilization review – A process whereby an insurer evaluates the appropriateness,
necessity, and cost of services provided.
Utilizer – A member who receives a specific service.
Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013
Arizona Department of Administration Human Resources Division 100 N. 15th Avenue, Suite 261 Phoenix, Arizona 85007 Telephone: 602-542-5482 Health Insurance Trust Fund
January 1, 2013 to
Annual Report
December 31, 2013

Source: http://www.hr.state.az.us/PDF/Health_Insurance_Trust%20Fund_Report.pdf