University Times

Beginning July 1 and continuing for three years, UPMC Health Plan will be the sole provider of medical insurance for Pitt employees.

University administrators announced the three-year contract last week. Chancellor Mark Nordenberg said the deal offers high-quality health care and a broad range of coverage choices, while holding costs to manageable levels.

The premiums that employees will have to pay for Pitt health insurance beginning July 1 are expected to be announced by the administration later this month.

Currently, 1,981 Pitt faculty and staff use UPMC Health Plan's HMO option. Another 5,093 are members of the three plans currently offered here by Highmark Blue Cross/Blue Shield. (Still another 1,000 Pitt employees opt out of the University's health plans because they receive coverage elsewhere — through their spouses' health insurance, for example.) All faculty and staff who use Pitt health insurance, not just those currently enrolled in Highmark, will have to fill out forms indicating their insurance choices during the open enrollment period from March 20 through May 26.

That includes employees now enrolled in the UPMC Health Plan HMO who simply want to remain in it. Such employees will have to declare that they want to continue in the plan.

Employees who want to continue opting out of Pitt health coverage must re-state that they have alternate coverage.

Under the new agreement with UPMC Health Plan, Pitt employees will continue to be covered during domestic and international travel. They also will retain the same types of coverage choices currently available here: an HMO, a comprehensive (deductible) plan and a point-of-service plan.

UPMC Health Plan provides access to more than 4,000 physicians and specialists in 29 western Pennsylvania counties. Ron Frisch, associate vice chancellor for Human Resources, said his office hasn't yet computed how many employees currently enrolled in Highmark receive care from doctors who aren't members of UPMC Health Plan's physicians network. "We don't think there are very many," he said.

Frisch noted that employees in the comprehensive and point-of-service plans are free to choose non-network physicians, although such plans charge deductibles or higher monthly premiums for that flexibility.

To check on-line if a physician is a member of the UPMC Health Plan network, go to the Human Resources website at www.hr.pitt.edu and click on the UPMC Health Plan logo. That will bring up the UPMC Health Plan page. At the left margin of this page, click on the Physician Directory.

Chancellor Nordenberg, in a Feb. 22 Campus Update about the health insurance contract, wrote that "given the significant overlap in the Highmark and UPMC Health Plan physician pools, we hope that any adverse effects will be limited, and both the University and the UPMC Health Plan are committed to making any transitions as smooth as possible. We realize, in particular, that special issues may exist for regional campus employees and are prepared to assist with them."

Pitt employees will be able to use their prescription benefits at some 50,000 pharmacies across the country under the new contract, including the Phar-Mor chain. "Our pharmacy network will be unique to Pitt," said Frisch of Human Resources. "It's something we negotiated with UPMC Health Plan. Pitt employees won't be limited to the restrictive, Giant Eagle-based network that UPMC offers its own employees."

q Pitt will spend about $26 million on health insurance premiums during the current fiscal year, which ends June 30. That amount will increase by $3 million over the life of the three-year contract with UPMC Health Plan, Pitt Human Resources officials said.

Chancellor Nordenberg said the University's overall medical insurance costs may actually decrease next year, and that UPMC Health Plan has agreed that cost increases in the following two years will be "reasonably capped."

Highmark, in its bid for Pitt's business, had sought first-year rate increases ranging from 13 percent to 25 percent, University officials said. And Highmark was unwilling to cap increases for succeeding years.

"To make matters worse," Nordenberg wrote, [Highmark] insisted on a provision that would have required the University to become a self-insurer, by assuming the full financial risk of incurred employee medical costs in addition to paying a program administration fee, if Highmark's share of our business fell below a specified threshold. Ironically, Highmark's share of our business already has fallen beneath that threshold."

Highmark spokesperson Michael Weinstein said his company, like many other health insurers, has stopped offering multi-year premium caps because of escalating prescription drug prices and other, unpredictable cost increases.

"Given the financial losses that UPMC has incurred with their health plan," Weinstein added, "it raises questions about their approach. We think the community has reason to be concerned about this."

UPMC Health Plan spokesperson Mark Lynch countered: "It's not exceptional for insurers to offer multi-year caps, although, for obvious reasons, many insurers prefer not to offer them."

Lynch denied that the Pitt contract will be a money-loser for UPMC Health Plan.

"We did not go into this contract with Pitt lightly," he said. "Keep in mind, we have two years' experience with Pitt already" in providing the UPMC Health Plan HMO here. "We studied all aspects of the new contract very carefully, and we feel that we can meet Pitt's health care needs while remaining profitable."

UPMC Health System's insurance subsidiary lost $16 million in 1998 because of start-up costs, Lynch acknowledged. But the subsidiary's commercial health plan (the one that contracts with Pitt) is now breaking even, he said. And while the subsidiary's Medicaid plan is still losing money, its prospects are looking up thanks to a recent rate increase from the state Department of Public Welfare, according to Lynch.

Highmark's Weinstein said his company isn't writing off the Pitt market. "We were disappointed [by the new contract] but it didn't come as a surprise, given the close relationship between Pitt and UPMC. In today's health care environment, it's not unusual for purchasers of health care coverage to look for opportunities to get more value for their dollar," he said. "Our market experience indicates that customers sometimes move on to other insurers but then come back to Blue Cross/Blue Shield."

q Since Jan. 1, UPMC Health Plan has been the sole health insurer for some 1,000 employees of the Carnegie museums and library. The Carnegie dropped Highmark and Health America and, like Pitt, signed a three-year exclusive contract with UPMC.

"Since October, when we announced this contract, the UPMC Health Plan people have shown themselves to be very good listeners and very good communicators," said Jim Bender, director of general services and human resources at The Car-negie. "They've been responsive to every issue that's come up with our employees. We've had minor problems, but there are always some problems when you change to a new insurer."

q The process of choosing next year's Pitt health insurer began several months ago, when the University requested bids from six companies. Only UPMC Health Plan and Highmark submitted bids.

The proposals were reviewed by Human Resources staff and the medical advisory committee, an advisory group that includes representatives of the University Senate and Staff Association Council. Benefits consultants William M. Mercer, Inc., assisted throughout the process.

Human Resources and committee members unanimously agreed to recommend that the University choose UPMC Health Plan as its sole medical insurance provider. Chancellor Nordenberg and his executive staff concurred.

Now, it's up to the administration to determine the monthly premiums to be paid next year by faculty and staff.

Frisch of Human Resources said it hasn't been decided yet whether rates will increase next year under any of the UPMC Health Plan plans (comprehensive, point-of-service and HMO) or coverage options (including individual; employee/child or children; employee/spouse, and family coverage).

Representatives of the Human Resources office and UMPC Health Plan — along with other Pitt benefits vendors — will be available at a March 27 and 28 benefits fair, 11 a.m.-3 p.m. each day, in the William Pitt Union Assembly Room to answer faculty and staff members' questions.

Health plan and Human Resources staff also plan to offer educational sessions around campus in April, at dates and sites to be announced.

Benefits fairs will be held at the Bradford campus on April 5, at Titusville April 6, at Johnstown April 12 and at Greensburg April 13.

Human Resources will mail details on the benefits fairs to employees later this month.

q This year's negotiations with health insurers were unusually secretive. In the past, Human Resources and medical advisory committee members gave occasional progress reports. But this year, no one was talking.

"At no time, during this whole process, did Highmark and UPMC Health Plan know what the other had on the table," said Frisch. "The fact that there were no leaks helped us in negotiating." As late as Feb. 21, the day before Pitt announced the new contract, "we were still pounding away on the UPMC Health Plan, trying to get better rates," Frisch said.

— Bruce Steele