The Canadian Drug Insurance Pooling Corporation (CDIPC) has mandated the minimum requirements for each insurer to use for their Extended Drug Policy Protection Plan (also called EP3). These requirements ensure a consistent handling of recurrent, high-cost drug claims when developing the premium rates for impacted sponsors. It promotes affordability, in particular for small and medium sized employer-sponsored drug plans that cannot absorb large premium increases. This helps fully-insured plans remain financially viable to the benefit of the plan members protected by them.
Sponsor Benefits
Examples:
Group ABC
Group ABC’s drug plan is CDIPC eligible and there are no certificate exclusions. In 2015, certificate 123 had drug claims of $80,000 and the current insurers pooling limit is $30,000 per certificate (the maximum allowable under the CDIPC framework). When the group renews, $50,000 of certificate 123’s claims will be pooled and the remaining $30,000 in claims will be included in the client’s experience. Since the CDIPC framework mandates that the pooling arrangements offered by participating insurers, are applied consistently, the employer can be reassured that the current insurer will not increase the pooling charges solely as a result of their individual pooled experience.
Insurer XYZ
Group ABC’s drug plan is CDIPC eligible and there are no certificate exclusions. From January 1st to December 31st 2014, Certificate 123 had drugs claims of $75,000. From January 1st to December 31st 2015, drug claims for that certificate reached $80,000.
Certificate 123’s drug claims in 2015 would qualify for CDIPC pooling since claims exceeded the initial CDIPC threshold for two consecutive years, $55,000 in 2014 and $60,000 in 2015. Therefore in 2015, drug claims in excess of the ongoing threshold of $30,000 will be included in the industry pool.
CDIPC sets the maximum amount that can be covered by the industry pool. For 2015, the maximum was $500,000. The cost of this industry pooling is not free. Each insurer is obligated to pay a pool charge into the industry pool that is equal to their market share of the total pooled claims for the entire industry.
