University Times

After two months of reacting to proposals and counter-proposals from Blue Cross and HealthAmerica, the University last week went on the offensive in its effort to trim employee health insurance costs.

Pitt's Human Resources office went back to both companies and essentially said: Forget your previous proposals and submit new bids, giving us your best guaranteed prices for the services we want. And quit telling us how much money you'll save us in 1995 compared with our 1994 payments.

(Such comparisons are largely irrelevant, the reasoning goes, because employee medical insurance premiums generally are declining. And because Pitt stopped offering the comparatively costly Blue Cross traditional plan at the end of December, the University will save $2.5 million in fiscal year 1995-96 even without changing its current health coverage.) HealthAmerica and Blue Cross have until Jan. 23 to submit new proposals.

Beginning on July 1, the start of the Pitt fiscal year, the University's health care enrollment year will be linked to the fiscal year instead of the calendar year. Any health insurance changes are expected to be announced in late March and would go into effect July 1.

Blue Cross kicked off the proposal-making process in November, when it submitted an unsolicited plan to become Pitt's sole provider of employee health insurance. The deal would have required the University to drop the HealthAmerica health maintenance organization (HMO) in exchange for an estimated $15 million in savings on Pitt's premiums over a 42-month agreement period.

In December, Health-America submitted a five-option counter-proposal — promising, as one option, to save Pitt $6.2 million annually in exchange for a HealthAmerica monopoly here.

Blue Cross then submitted its own three-option follow-up proposal, offering to be a sole provider or to continue co-existing here with HealthAmerica.

But as University Senate President James Holland told Faculty Assembly Jan. 10, "We're not interested in looking at the old options anymore. We're starting fresh." Holland serves on Pitt's Medical Rates and Program Review Committee, a group of faculty, staff and administrators who advise the senior administration on health benefits issues. Ultimately, Chancellor J. Dennis O'Connor and the Board of Trustees decide on benefits changes.

Faculty members of the committee came up with Pitt's new pro-active stance in dealing with HealthAmerica and Blue Cross, according to Holland. The full committee agreed with the idea, and Human Resources contacted the health insurers last week.

At the committee's recommendation, HealthAmerica and Blue Cross will base their proposals on the following conditions: * The HealthAmerica HMO and Blue Cross's Keystone HMO differ somewhat. For example, Keystone charges a $5 employee co-payment for checkups, while HealthAmerica covers such visits in full. But HealthAmerica and Keystone will base their proposals to Pitt on a standard package — no co-payments, as per HealthAmerica, but with Keystone's more extensive mental health coverage. Standardization will make the HealthAmerica and Keystone proposals easier to compare, the committee said.

* Both carriers have been informed that Pitt intends to change the way the University and individual employees share premium costs, beginning July 1. Currently, Pitt pays the full premiums for employees enrolled as individuals in any of the five medical insurance options offered here — the HealthAmerica HMO and four Blue Cross plans. But a new formula, yet to be determined, will encourage employees to choose among competing plans based on price and quality. One proposal, Holland said, is for Pitt to continue paying the full premiums for individuals, but individuals who choose less expensive plans would receive either cash rebates or credits that could be applied toward additional benefits.

* Pitt will still consider a sole provider proposal from Blue Cross but not from HealthAmerica. Holland told Faculty Assembly that administrative members of the medical rates committee insisted on this condition, stating that the University will not consider giving HealthAmerica a monopoly because University of Pittsburgh Medical Center (UPMC) doctors are excluded from HealthAmerica's network of primary care physicians. Holland noted, however, that HealthAmerica has offered to begin including UPMC physicians in its network.

He added that faculty and staff representatives on the medical rates committee oppose giving any company a monopoly on employee health insurance here.

Committee members, including administrators, have repeatedly stated that money is not the only factor that should be considered in deciding among the Blue Cross and HealthAmerica proposals. Disruptions of employees' medical care and the benefits to Pitt of competition among rival companies also should figure in, committee members say.

Regarding the Blue Cross sole provider proposal, medical rates committee member Darlene Harris contacted the Pennsylvania Department of Insurance last month in her capacity as president of Pitt's Staff Association Council (SAC).

In a Dec. 14 letter to committee members, Harris wrote that a department representative stressed the following points: "If Blue Cross admits that it is 'buying our business' by asking that the University discontinue its relationship with HealthAmerica, this is an illegal practice and should be reported to the Department of Insurance.

"If there are real savings, based on sound underwriting practices, then Blue Cross must be able to document those savings. If they do not depend on the elimination of the HealthAmerica option, then the University should be receiving these savings regardless of whether or not the option is eliminated.

"If the savings derive solely from the elimination of the HealthAmerica option, then there is little guarantee that Blue Cross will not greatly increase rates after the three-year agreement is up and the HealthAmerica option no longer exists." Harris said the Department of Insurance staff member "strongly warned that if Blue Cross is 'lowballing' its bid simply to get the University to eliminate the HealthAmerica option, then they are getting that money from some other organization and that three years from now the University will be that other organization as Blue Cross moves on to its next target. He suggested that one option open to the University is to forward the Blue Cross proposal to the Department of Insurance, whose actuary can examine it." Harris and Holland said that SAC and the University Senate may forward to the Department of Insurance any future proposals that Blue Cross and HealthAmerica submit to Pitt.

Assembly member Mark Ginsburg, president of the United Faculty organization that is seeking to unionize Pitt non-medical faculty, said the UF and SAC are circulating a petition among faculty and staff opposing sole provider status here for any health insurance company.

— Bruce Steele