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February 2, 1995

Latest health insurance proposals indicate some decline in rates

Based on the latest proposals that Blue Cross and HealthAmerica have submitted to Pitt, the University's employee health insurance premiums should go down in the fiscal year that begins July 1 — regardless of whether Pitt drops HealthAmerica (as Blue Cross has proposed) or otherwise changes its health insurance options.

Last week, at the request of Pitt's Human Resources office, the companies presented new bids to the University's Medical Rates and Program Review Committee, a group of faculty, staff and administrators who advise the senior administration on health benefits issues.

The committee heard presentations from representatives of HealthAmerica and Blue Cross of Western Pennsylvania on Jan. 26 and 27, respectively, and will discuss the proposals at a meeting tomorrow, Feb. 3.

Committee members plan to make their recommendations to the senior administration in March. Chancellor J. Dennis O'Connor and the Board of Trustees would make the final decision on benefits changes for fiscal year 1995-96.

Beginning July 1, Pitt's health care enrollment year will be linked to the fiscal year instead of the calendar year, as it traditionally has been.

The debate over the future of Pitt employee health insurance began in November, when Blue Cross submitted an unsolicited proposal to become the University's sole health insurer. The deal would have required Pitt to eliminate HealthAmerica in exchange for millions of dollars in promised savings on the University's Blue Cross premiums.

In December, Health-America submitted a five-option counter-proposal, offering to be a sole provider or to continue co-existing here with Blue Cross.

Blue Cross followed that with a three-option counterproposal comparable to HealthAmerica's.

Last month, Pitt told the two companies to scrap their previous bids and submit proposed rates for eight different packages of health coverage.

One of the eight scenarios is for Blue Cross to have sole provider status. Another is aimed at standardizing the coverage offered by the HealthAmerica health maintenance organization (HMO) and Blue Cross's Keystone West HMO, which differ somewhat. For example, Keystone charges a $5 co-payment for checkups, while HealthAmerica covers such visits in full.

According to the proposals, Pitt's monthly savings would range from $1 to nearly $100 per employee, depending on the scenario and the plan involved.

Pitt currently offers the HealthAmerica HMO and four Blue Cross plans — Comprehensive (deductible), the Keystone West HMO, the University Health Network, and the SelectBlue point of service plan.

HealthAmerica complied with the medical rates committee's request for "fully insured" rates, meaning the company guarantees the rates regardless of Pitt employees' actual use of health benefits next year.

Blue Cross, however, would guarantee only the rates it would offer if it is granted a monopoly on Pitt health insurance. Blue Cross proposed its other rates on a "cost plus" basis, meaning the University's actual premiums could cost more or less than the rates cited in Blue Cross's proposal, if Blue Cross's estimates of Pitt employees' benefits use prove to be inaccurate.

In some cases, Blue Cross and HealthAmerica said they couldn't comply with Pitt's requests for rate quotes.

For example, the University asked for proposed rates based on Keystone West and HealthAmerica eliminating mental and nervous health benefits from their basic coverage. (The medical rates committee stressed that it will not recommend getting rid of those benefits. But eliminating them from the rate proposals would make it easier for the committee to compare the two companies because Keystone West offers more extensive mental/nervous health benefits than HealthAmerica does.) Both HealthAmerica and Keystone West declined to cite rates for this scenario because, they said, excluding mental/nervous benefits would require approval by both their senior officers and the Pennsylvania Department of Insurance — a process that would take six months to a year, under the unlikely assumption that such an exclusion would be approved.

Also, Pitt requested a combined alcohol and drug detoxification/rehabilitation benefit, but state regulations do not permit combining detoxification and rehabilitation benefits, according to the insurers.

See this page and page 2 for an additional story and letters on the Blue Cross and HealthAmerica proposals.

— Bruce Steele

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