[vc_row content_width=”grid”][vc_column][vc_column_text]For insurers and administrators of employee benefit plans[/vc_column_text][/vc_column][/vc_row][vc_row content_width=”grid”][vc_column][vc_column_text]
Ed. Note: This information bulletin does not have the force of law. It represents the point of view of the Quebec Drug Insurance Pooling Corporation on various subjects, based on the Act Respecting Prescription Drug Insurance.
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_empty_space][/vc_column][/vc_row][vc_row content_width=”grid”][vc_column el_class=”pie” css=”.vc_custom_1459285594775{border-bottom-width: 1px !important;padding-bottom: 13px !important;border-bottom-color: #ebebeb !important;}”][vc_text_separator title=”Communicating the Pooling Parameters to Clients”][vc_column_text css=”.vc_custom_1461673093519{border-bottom-width: 1px !important;padding-bottom: 20px !important;border-bottom-color: #e4e4e4 !important;border-bottom-style: solid !important;}”]
It is important for the members of the Quebec Drug Insurance Poling Corporation and for all those involved in the annual process of pooling the risks arising from the cost of medications, to understand exactly how the process is set up. But is the same true for clients of insurers and third party administrators of employee benefit plans? This bulletin addresses that question.
[/vc_column_text][/vc_column][/vc_row][vc_row content_width=”grid”][vc_column][vc_column_text]
The mandate of the Quebec Drug Insurance Pooling Corporation (the Corporation) is to oversee the proper functioning of the system of pooling the risks inherent to the cost of medications. In this context, the Corporation defines and revises the terms and conditions of pooling in order to maintain accessibility of private drug insurance coverage despite the risk of large claims. The terms and conditions of pooling are reviewed annually so as to follow the evolution of the number and profile of groups that participate in pooling, the state of health of the insured population and pharmaceutical therapies.
Naturally, the Corporation is committed to communicating these terms and conditions, but there is no direct link between the Corporation and the client of an insurer or thirdparty administrator.
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_empty_space][/vc_column][/vc_row][vc_row content_width=”grid”][vc_column][vc_text_separator title=”A recap of section 43 of the Act Respecting Prescription Drug Insurance”][vc_column_text]
The Corporation came into being in 1997 in the wake of the adoption of the Act Respecting Prescription Drug Insurance, under section 43, which states that:
“All insurers transacting group insurance and all administrators of employee benefit plans who provide coverage for the cost of pharmaceutical services and medications must pool the risks arising from the basic plan coverage they provide according to the terms and conditions they determine.
The terms and conditions must be communicated by the representatives of the insurers and administrators, in writing, to the Minister not later than 1 November each year. Failing that, the terms and conditions shall be determined by government regulation for the period it indicates.”
Under this section, all insured and non-insured plans, whether or not administered by an insurer, are subject to the requirement to pool the risks arising from the basic plan. They are required to do so by applying the terms and conditions set up and managed by the Corporation.
The terms and conditions of pooling consist of the pooling thresholds and the pooling factors, both of which are based on the size of the group benefiting from the plan’s guarantees.
The cost of medications is pooled above a certain threshold, which varies according to the size of the groups of persons involved which itself is determined according to the ability of those groups to absorb significant increases in the cost of medications. The objective is to prevent a given group from experiencing too heavy a cost increase, putting the plan’s sustainability at risk and depriving its members of adequate coverage. This being said, the pooling system developed by the Corporation is neither a form of insurance coverage nor of reinsurance.
For insured plans, a part of the premium – the “pooling factor” – is reserved for pooling. Non-insured plans are required to pay the pooling factor into the Compensation Table. At the time of compensation, the pooling factor may be revised to ensure complete compensation of the sums in question.
[/vc_column_text][/vc_column][/vc_row][vc_row content_width=”grid”][vc_column][eltdf_tabs tabs_layout=”eltdf-tabs-regular”][eltdf_tab title=”Who should inform clients about the parameters of pooling?”][/eltdf_tab][/eltdf_tabs][/vc_column][/vc_row][vc_row content_width=”grid”][vc_column width=”2/3″][vc_column_text]
In the interest of transparency and the benefit of all stakeholders in pooling, the Corporation encourages all insurers and third-party administrators of non-insured employee benefit plans to communicate to their clients the risk pooling parameters, though there is no law requiring them to do so. Here are the reasons:
An insurer may legally conclude a financial agreement with a client that differs from the pooling system terms and conditions set up by the Corporation for a given year (for example, by specifying a lower pooling factor in order to decrease the client’s premium at the same time as maintaining the threshold defined by the Corporation). However, the Corporation recommends that clients and advisors question their insurer if the pooling charges differ from those established by the Corporation, in order to ensure that they truly understand how the risk is evaluated, as well as the possible consequences of the agreement
It must be clear that the Corporation cannot compensate an insurer who has underevaluated the client’s risks, nor can it be held responsible for such a situation. The Corporation manages the risk pooling system in such a way that the total of sums collected equals the total of sums paid out in compensation. The Corporation determines and adjusts the annual pooling factor so as to maintain this balance; no fund is ever created for sums on deposit.
Since, under the Act Respecting Prescription Drug Insurance, an employee benefit plan must always obtain protection for any medication that is covered by the basic prescription drug insurance plan, it is up to the insurer, or the client in the case of a noninsured plan, to assume any loss arising from a poor evaluation of the cost of insurance protection.
The Corporation therefore recommends that insurers and third-party administrators of employee benefit plans inform their clients about the annual terms and conditions of the pooling system and of any way in which they are different from what is being offered to their clients, so that the latter can enter the contract with a thorough understanding of the mechanisms involved.
The terms and conditions of pooling are revised annually and published on the Corporation’s Web site at www.pooling.ca (under Publications/Reports) for the information of members and anyone else wishing to learn about them.
[/vc_column_text][/vc_column][vc_column width=”1/3″ css=”.vc_custom_1459286403414{padding-top: 16px !important;}”][vc_column_text]
In other words
It is up to insurers and third-party administrators of employee benefit plans, for the protection of their clients and their own personal protection, to ensure that their financial agreements are adequate since under-evaluating the cost of insurance protection for a given year could have undesirable consequences. Unfortunately, the Corporation cannot help insurers or third-party administrators of employee benefit plans who may find themselves in such a situation, since that is not the Corporation’s role or its mandate.
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_empty_space][/vc_column][/vc_row][vc_row content_width=”grid”][vc_column][eltdf_tabs tabs_layout=”eltdf-tabs-regular”][eltdf_tab title=”In the next issue”][vc_column_text]In the Corporation’s Information Bulletin No. 2011 – 7, read about “The Compliance Certificate, its content, its meaning and who should sign it”.[/vc_column_text][/eltdf_tab][/eltdf_tabs][/vc_column][/vc_row][vc_row content_width=”grid”][vc_column][vc_empty_space][/vc_column][/vc_row]
