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Given that the catastrophic stop loss program would have fewer required administrative functions than the HayGroup's State sponsored health plan, start-up costs would be lower. The HayGroup projected $3 million in start-up costs are spread over a two-year period. The start-up costs for administration of the catastrophic pool are estimated to be approximately $1.5 million during the two year implementation of the catastrophic pool. The reduction in cost would be directly related to the level of specific stop loss provided by the State. If the State offered specific stop loss for amounts ranging from $50,000 to $150,000, it would have a direct effect on the cost of the local school districts underlying plan through the spreading of risk. To protect the State program against adverse selection, districts would be required to conform to plan requirements. There are proven savings when using a PPO plan as illustrated by the recommendations of the HayGroup report. Districts could still offer employees the option of a HMO plan (s). HMO plans would be excluded from the catastrophic pool given their unique structure. School districts would also need to be pro-active in promoting employee wellness and to provide chronic care management programs to members living with disease if they are to participate in the catastrophic pool. The school district would be required to:
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