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February 6, 2003

New health insurance contract "weeks away"

Pitt is still “a couple of weeks away” from signing a new contract for employee health insurance, according to Vice Chancellor for Human Resources Ronald W. Frisch.

“The negotiations [with health insurers] have been going slowly this year, the slowest I’ve ever seen,” Frisch said this week. “We keep pushing and pushing, but we’re not there yet.”

Pitt’s exclusive contract with UPMC Health Plan expires June 30. The University must sign a new contract soon if it hopes to distribute enrollment forms to employees and get those forms returned by the end of April.

“In previous years, we’ve sent forms out in mid-March. Now we’re pushing it to April,” Frisch said. “We have to catch the faculty before they leave at the end of the spring term.”

Last fall, Pitt requested bids from the major players in western Pennsylvania’s health insurance market: UPMC Health Plan, Aetna, HealthAmerica and Highmark. Two vendors are still in the running for Pitt’s business, Frisch said, but he wouldn’t identify them. However, UPMC Health Plan spokesperson Bill Sawchak said his company is one of the two.

Neither Frisch nor Sawchak would give any hints as to how high Pitt’s premiums might jump in July.

Economics professor Herbert Chesler, who serves on a committee that is advising Pitt’s administration during the contract negotiations, told Faculty Assembly last week: “We will have a set of options, each with hefty cost increases. We haven’t been told who the vendor will be yet; that process is still going on. We haven’t been told about premium costs or the details of any of these plans.

“There will be increases in co-payments,” Chesler said. “Our prescription plan will change. It’s going to cost us more, substantially more.”

Chesler also told Faculty Assembly that Pitt will drop its Comprehensive plan. Frisch would not confirm this, although he noted that the Comprehensive plan duplicates coverage available under the University’s current Point-of-Service plan for subscribers who go outside the plan’s physicians network.

Members of the advisory committee on health insurance have been sworn to secrecy throughout the negotiations — not that they’ve been let in on many secrets, according to Chesler. “We have no dollar figures yet. Everything is approximations.”

He complained that Pitt governance groups such as the University Planning and Budgeting Committee, the University Senate’s benefits and welfare committee (which Chesler co-chairs) and the Senate’s budget policies committee have been kept in the dark about the likely shape of things to come in Pitt health insurance.

“And yet, somebody must be very close to making decisions, if they haven’t already been made,” Chesler said. “Come April 1, we’ll have the packages in our hands, with the costs and with knowledge of what our premiums will be for the options that we select.”

Chesler emphasized that he wasn’t criticizing negotiators from Human Resources or Pitt’s health insurance consultants, “who have been working very hard and doing an excellent job on behalf of the University.”

According to Chesler, the advisory committee saw data indicating that UPMC Health Plan lost money on its current deal with Pitt. “All of the projections [UPMC Health Plan] made turned out to be wrong,” Chesler said. “It’s pretty clear from what’s been presented to us that the cost to UPMC — that is, the claims that the health plan paid — has far exceeded the premiums that Pitt has paid.”

Health Plan spokesperson Sawchak said: “UPMC Health Plan does not comment on business matters associated with any of our 4,700 employer groups. Our overall fiscal performance for the previous year will be published in our next annual report, which is due out in April.”

— Bruce Steele

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