University Times

Faculty and staff representatives familiar with the negotiations for Pitt’s new health benefits options, which were announced last week, praised Human Resources’ efforts in limiting cost increases while improving some benefits.
“I think this is as good a system as we could have,” said Herbert Chesler, co-chair of the University Senate’s benefits and welfare committee. “The increases [in premiums] are very modest for the plans where the co-pays are highest.”
As HR personnel negotiated this year’s health coverage options, which take effect on July 1, they were advised by a medical advisory committee that included representatives of the University Senate and the Staff Association Council (SAC).
SAC President Rich Colwell said that staff views were well represented on the committee. “[SAC’s] voice was heard and positive changes were made to help shape the final plan,” Colwell said. “The change in the vision plan, with participants being able to take advantage of eye care yearly, as opposed to every other year, is a gain at no additional cost to the plan. The portability of life insurance and the options for additional coverage are also positive.”
Alan Meisel, professor of law and bioethics and a member of medical advisory committee, said, “We were involved primarily in selecting a pharmacy benefits manager. There I thought that the HR people did an excellent job of getting various options and getting for us an excellent deal, especially considering what the climate is concerning costs for pharmaceuticals these days.”
Changes in health benefits options for Pitt employees this year are much less dramatic than last year, when the University introduced a four-plan medical benefits menu. Details of the benefits are contained in the packets that went out to all faculty and staff last week.
“We still have the same provider (UPMC Health Plan), we still have the four-plan design, with only modest changes to the plans, and we’ve increased benefits,” said Jim Edgerton, assistant vice chancellor for Compensation and Benefits. Employees will continue to have access to UPMC’s network of some 6,000 physicians through all four plans, he said.
The new medical insurance contract extends Pitt’s exclusive relationship with UPMC Health Plan through June 30, 2005. The University did not send out requests for proposals to other insurance carriers this year, as has been the custom in past years, according to Ron Frisch, associate vice chancellor for Human Resources.
“We got a commitment last year from UPMC Health Plan to hold the administrative fees for a second year at a constant rate, so we made a decision not to go out for bid for the medical aspect of the benefits,” Frisch told the University Times this week.
Pitt did seek competitive bids for its pharmacy benefits insurance, Frisch said. Five insurers submitted prescription drug plan bids, and UPMC Health Plan was chosen as Pitt’s pharmacy insurance provider, he said.
According to John R. Kozar, Pitt senior health care manager who also participated in the negotiations, Pitt’s overall health cost for the coming plan year is expected to be $60 million, of which $15 million, or 25 percent, will be for pharmaceuticals.
Edgerton said that initial projections were that Pitt’s costs would increase over last year’s by 15 percent. “During negotiations, we reduced the costs to, on average, a 12.9 percent (increase),” he said.
Pitt is picking up 80 percent of the 12.9 percent increase, Edgerton noted. The balance is passed on to individuals in higher premiums, although this year there is no premium increase in the Panther Basic Plan, one of four medical plan options.
The most popular health plan, enrolling about 80 percent of Pitt employees, is Panther Gold, where premium rates for individuals will go up from $35 per month to $38 per month; family coverage under that plan will increase from $192 per month to $218 per month. Other higher or new co-payments include:
* Diagnostic imaging procedures such as X-rays and sonograms will have a $5 co-payment, and “high-tech” procedures such as MRIs and CT scans will carry a $25 co-pay. Each of these classes of imaging procedures will have a maximum of four co-pays in a plan year and then will be covered 100 percent.
* Prescription drug co-payments have increased for preferred brands from $20 to $24, and for nonpreferred brands from $40 to $48. The co-payment for generic drugs will remain at $10. Those electing a brand-name drug are responsible for the preferred brand co-payment ($24) plus the cost difference between the generic equivalent and the brand-name drug. A 90-day supply of prescription drugs, available through CuraScript mail order service or at Falk Clinic pharmacy or the Student Health Services pharmacy, will continue to cost two co-pays per 90-day supply at the above rates.
* Subscribers to the dental insurance plan will see a rate increase of 7.9 percent. But there will be no increase next year under the two-year contract terms with the dental insurer, United Concordia, Kozar said. A $5 co-pay has been added to certain services under the ConcordiaPlus managed care plan, he said, for employees who get dental care at either Pitt’s School of Dental Medicine or the University Dental Health Services Inc. provider.
Frisch said that co-pay is indicative of Pitt’s overall philosophy to shift some costs to users who access services more often, instead of increasing premiums for all subscribers. Edgerton said, “Cost-sharing is reflected in the premiums: We all pay the same premium, because we all share in the risk. Cost shifting is done through co-pays.”
Other features of the health benefits options include:
* Enhanced vision insurance plan benefits. Under a new two-year contract with Clarity Vision, premiums remain the same, while subscribers, regardless of age, now are eligible for annual eye exams and new frames and lenses.
* A pre-tax commuter flexible-spending account, where eligible employees can pay for certain transportation expenses incurred while commuting to work.
* Reduced optional group life insurance rates and four new options covering spouses and dependents.
“Now’s a very good time to look into life insurance,” Kozar said. “We re-bid the life insurance package and got a new contract from Aetna Life Insurance Co., and the group-life rates went down for optional life insurance, and the option is age-graded, weighted per thousand, and rates went down in all age categories,” he said.
“There also is a one-time window of opportunity with this open enrollment, that if you’ve never taken optional life insurance, you can enroll at 1-times your base pay without providing evidence of your insurability,” he added. The coverage also is “portable,” if an employee should leave the University, Kozar noted.
Overall, Frisch said, the new health plan options are reasonable in a climate of soaring costs. “Our job is to prepare and help people understand that health care costs are going to continue to go up,” he said. “We can’t put our heads in the sand; medical trends and particularly the pharmacy trends will continue to spiral upward, so, the more consumer-driven we are as far as managing our own health care, the insurance system that we use, and how we navigate our insurance (options) will go a long way in helping us be more efficient.”
He also urged employees to pursue generic drug options, where possible. “We need to continue to emphasize the fact that prudent and efficient management of generic drugs will go a long way to controlling future cost increases – not that it will diminish them,” he said.
SAC’s Colwell said that, as expected, there are some increases in the costs to subscribers, including increased premiums in most cases and additional drug co-payments. “But all in all, I believe that the benefit plans are quality plans for the staff.”
Meisel, who is a first-time member of the medical advisory committee, added that, despite some higher co-pays and coverage limitations on various medications, “my feeling is that [Human Resources] did a marvelous job getting us a pharmaceutical plan that is much better than many other employers offer at rates that are competitive if not better than most.” One point should be stressed, said Meisel: Pitt’s plan is as good as any plan “unless the University is going to pick up the whole cost, which would be a wonderful deal – except that money would come out of compensation. That’s something people have to recognize, that there is a limited pot of money for compensation and benefits. If benefits are going to go up, it’s going to impact salary to some extent.”
Chesler said, “My impression is that the medical advisory committee concurred with all of the changes.” For the University to pick up 80 percent of the increased costs is consistent with a general commitment that Pitt has honored in the past, he said. “It still keeps the University’s total share of the medical insurance premium significantly above 80 percent.”
Chesler said the increases in pharmaceutical costs are unavoidable. To off-set those increases, Pitt is encouraging subscribers to use generic drugs. Those who choose to use name brand drugs can get their physician to request an exemption, he pointed out.
Chesler noted that HR added expert staff to lead negotiations, something needed in an institution of Pitt’s size. “What’s important to me to have come away from these meetings with the belief that we have been very well represented by Human Resources. I’m forever willing to be a critic – constructively. But I’m pleased now.”
-Peter Hart & Bruce Steele
health benefits