Agreement addresses the following key principles

Availability – All fully insured groups in Canada should be able to continue to purchase group extended healthcare coverage from an insurer designed to meet their specific needs.

Affordability – All fully insured groups should be able to purchase group extended healthcare coverage at a reasonable price. A plan sponsor should not see unaffordable rate increases due to the incidence of a large recurring drug claim from one of its members or their dependents.

Transferability – All fully insured groups should be able to select the participating insurer of their choice and not be tied to their current participating insurer in the presence of a large recurring drug claim.

Viability – No solution should unduly undermine the ability of a participating insurer to continue. Both large and small participating insurers should be able to abide by these principles and continue to offer health insurance products.

Participative – Any sustainable solution should be available to all interested eligible insurance companies.

Competitive – Any solution must be pro-competitive and continue to encourage an active and vigorous competition in the market.

EP3 Standard - Mandatory Pooling:

EP3 addresses the key principles of affordability, availability and transferability of coverage.

Participating insurers must place all large drug claims, from all of their fully-insured group business, in a self-administered pool. No ability to opt out for fully insured plan sponsors.

Participating insurers cannot experience rate based on the number or value of pooled drug claims for that particular plan sponsor.

In addition, participating insurers cannot experience rate and price a bid for new business from another participating insurer based on that plan sponsor’s pooled drug claims.

Individual participating insurers can, however, set premiums based on the experience of the entire EP3 pool, or based on any other non client-level experience criteria.

Drug and non-drug health benefits can be pooled together. But,

1. 1. EP3 rules apply to drug portion only of pooled benefits, and
2. 2. The carrier is required to have processes that can demonstrate that they are following the rules of EP3 for the drug portion

1. 1. Pricing
2. 2. The pooling threshold (although must be <= "ongoing threshold")
3. 3. Whether the pooling is done on an individual drug amount or a certificate amount
4. 4. Requiring co-payments or deductibles (subject to a cap of $1,100 for deductibles)
5. 5. Formulary design

Industry Pooling:

Industry pool is transparent to sponsors and addresses the key principle of viability.

Industry pooling is at a certificate (family) level and to qualify for the industry pool, the certificate must exceed $50,000 for at least two consecutive years.

In year two and in each subsequent year where the drug certificate exceeds $25,000, the amount over $25,000 will pooled. The maximum amount that the pool will pay out to a carrier on any one certificate is $400,000 per year.

• In effect, therefore, in 2013 the largest drug claim that could be fully pooled is roughly $500,000

• Pool 1 – Residents of Alberta, Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Yukon, North West Territories and Nunavut
• Pool 2 – Residents of Quebec
• Pool 3 – Residents of British Columbia, Manitoba and Saskatchewan