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January 5, 1995

HealthAmerica, Blue Cross make multiple proposals to University

The future of Pitt employee health insurance has grown increasingly complicated in the last two months.

In November, Blue Cross proposed becoming Pitt's sole provider of employee health insurance — a deal that would require the University to drop HealthAmerica in exchange for an estimated $5 million in savings on Pitt's premiums next year.

Then in December, HealthAmerica submitted a five-option counter proposal.

Soon after, Blue Cross submitted its own three-option follow-up proposal.

Shortly before the winter break, Pitt's Human Resources office sent copies of the HealthAmerica proposal and the latest Blue Cross proposal to members of the Medical Rates and Program Review Committee, a group of staff, faculty and administrators who advise the senior administration on health benefits issues.

The committee plans to discuss the proposals at its next meeting tomorrow, Jan. 6. That meeting is closed to the general University community, but the proposals are on the agenda for the Jan. 10 Faculty Assembly meeting, which is scheduled to begin at 3 p.m. in 1K56 Forbes Quadrangle and is open to the public.

The following summary is based on copies of the current proposals obtained by the University Times. Blue Cross described its projected savings as "estimated." HealthAmerica called its savings "guaranteed." Blue Cross's proposals

1. Eliminate HealthAmerica, giving Blue Cross a monopoly on employee medical insurance here. Savings during the next fiscal year, which begins July 1 — $5 million.

2. Continue offering HealthAmerica to employees currently in the plan but forbid new HealthAmerica enrollments. FY 1996 savings — $3.1 million.

3. Leave everything the way it is now. FY 1996 savings (based on reduced Blue Cross premiums) — $2.5 million.

HealthAmerica's proposals

1. Eliminate Blue Cross, retaining the HealthAmerica health maintenance organization (HMO) and adding a HealthAmerica point of service (POS) plan similar to Blue Cross's SelectBlue plan. Under a POS plan, eligible medical services are covered when a primary care physician coordinates the care. If the employee chooses to bypass his or her primary care physician, co-payments may be charged. FY 1996 savings — $6.2 million.

2. Same as the first proposed option, but Pitt would continue to offer the Pitt-based University Health Network. FY 1996 savings — $5.4 million.

3. Retain all four current Blue Cross options and the current HealthAmerica HMO and add two HealthAmerica POS plans: the "100/80" plan (eligible medical services covered 100 percent when a primary care physician coordinates the care; 80 percent when the employee goes outside the plan's network of physicians) and the "90/70" plan (services covered 90 percent under primary care physician; 70 percent outside the network). FY 1996 savings — $2.5 million.

4. Same as the third option, but freeze new Blue Cross enrollments. FY 1996 savings — $2.6 million.

5. Status quo. FY 1996 savings (based on reduced HealthAmerica premiums) — $1.1 million.

Darlene Lewis, Pitt associate vice chancellor for Human Resources, declined to comment on the proposals. "At this point, I'd like to keep the discussion within the confines of the Medical Rates Review Committee," she said.

Blue Cross and HealthAmerica officials said it is the policy of their companies not to comment on proposals like the ones submitted to Pitt.

But Mike Blackwood, HealthAmerica's president and chief executive officer, confirmed that his company has proposed a major policy change: If Pitt offers its employees an additional HealthAmerica plan or plans beyond the current HMO, HealthAmerica will consider including University of Pittsburgh Medical Center (UPMC) doctors in HealthAmerica's network of primary care physicians.

In the past, HealthAmerica has referred patients to UPMC hospitals only when no other area hospitals could provide the specialized services those patients required. In a previous interview, Blackwood said HealthAmerica does not use Presbyterian University Hospital because the hospital's rates are the highest in western Pennsylvania.

But in its current proposal, HealthAmerica said it would be willing to allow its Pitt enrollees to use UPMC doctors as primary care physicians within the HealthAmerica network — although not as physicians at HealthAmerica's centers, because the latter doctors are full-time HealthAmerica employees.

Pitt administrators have said that the University will not give sole provider status to any health insurer that excludes Pitt-affiliated physicians.

Faculty and staff members of the Medical Rates Review Committee, including University Senate President James Holland and Staff Association Council President-Elect Joan Slezak, say they oppose giving any company a monopoly on employee medical insurance at Pitt.

They cite the current HealthAmerica and Blue Cross proposals as evidence of the benefits of competition among health insurers.

At last month's Senate Council meeting, committee member Herb Chesler said: "We have a splendid opportunity now to get more from HealthAmerica than just an HMO-clinic type option, and to get more options and lower rates from Blue Cross.

"That wasn't anticipated when Blue Cross first presented its monopoly proposal. The nature of the dynamic now is much more complicated, and I think we all stand to gain from this." The Medical Rates Review Committee plans to submit its final recommendation to Chancellor J. Dennis O'Connor by the end of March. Prior to that, a sampling of faculty and staff will be surveyed for their opinions of proposed health insurance options, as part of a study that Katz Graduate School of Business professor Audrey Murrell is doing of Pitt fringe benefits. Beginning July 1, Pitt's health care enrollment year will be linked to the University's fiscal year instead of the calendar year. So whatever changes, if any, O'Connor approves would go into effect July 1.

— Bruce Steele

Filed under: Feature,Volume 27 Issue 9

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