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SUMMARY OF MEETING

OSU FACULTY SENATE WITH REPRESENTATIVES OF

THE PUBLIC EMPLOYEES BENEFIT BOARD (PEBB) AND PROVIDENCE

June 11, 2009

 

Prepared by Linda King

Associate Vice President for Human Resources

University of Oregon

 

Representatives:

PEBB:  Joan Kapowich (JK), PEBB Administrator

Providence:  Dan Stevens (DS), Regional Director, Network Development

                        Barbara Christiansen and Sally Hill

 

Note:  Handouts of the presentation slides were not available; summary is based on my notes and recollection.

 

PEBB Presentation by Joan Kapowich, PEBB Administrator

 

PEBB Approach

JK provided background on PEBB, including the following vision elements of effective health care coverage: 

• Evidence-based
• Health outcomes focus           
• Affordable
• Supportive of health and wellness
• Data-driven

 

JK explained that the Board designs the plans, not Regence.  PEBB employs value-based design features:

• Chronic disease management
• Low-cost (or no-cost) drugs for chronic illnesses
• No-cost cancer screenings
• Weight management
• Smoking cessation

 

JK emphasized that PEBB made no plan design changes for 2010, that is, what services are covered and at what level has not changed.

 

Self Insurance

JK explained that, in insurance, the entity that “carries the risk gets the reward.”  With the decision to pursue the self-insurance model, PEBB assumes the risk in the health insurance with the potential for the “reward.”  PEBB reserves (amounting to $78 million) will be available to cover losses, if any, to the plan.  She pointed out that Regence had a net profit from PEBB of $199 million over a seven-year period.

 

The PEBB self-insurance decision-making process took over seven years with the following steps:

• 2002    Formed work group to explore
• 2003    Obtained statutory language to allow self insurance
• 2005    Conducted RFP process for regional medical plans
• 2006    Implemented self insurance for regional medical plans
• 2007    Implemented self insurance on dental plan (?)
• 2010    Will implement self insurance on statewide medical plan

 

PEBB initially planned to implement the self-insurance model for the statewide plan in 2011, but Regence’s proposed increase of 16.4% for 2010 changed the landscape.  The state had budgeted 5% in each year of the biennium for health insurance increases.  Regence knew of PEBB’s plan to go to self-insurance the following year; the 16.4% increase was seen as a way to “protect the business.”  PEBB rejected the Regence bid as untenable given the current bleak financial picture and moved the self-insurance start date up one year from 2011 to 2010.

 

Contract Award for Third-Party Administrator

Under the self-insurance model, PEBB needs to contract with a third-party administrator to contract with a network of practitioners, clinics, and hospitals and to process claims.  PEBB asked qualified organizations to compete in the bid process for this contract, using the following criteria:

·      Customer service

·      Design flexibility

·      Claims efficiency

·      Disruption avoidance

·      Administrative fees

·      Alignment with PEBB’s vision (as described above)

·      Costs and savings

 

Providence Health Plans was received the award and a two-year contract has been signed.  JK states that Providence’s bid was lower ($2.1 million) than that of Regence and the board felt Providence had better administrative capabilities and was more response to PEBB’s vision for healthcare.  (See June 5, 2009 “Questions and Answers on 2010 Healthcare Plans,” PEBB website.) 

 

Possible Sweep of PEBB Reserves

 The question of a possible legislative sweep of the $78 million in PEBB reserves was raised.  JK reported that the Department of Justice had advised that the contract for self insurance will protect the reserves.  She also believes that legislators understand the potential savings in the self-insurance model.

Presentation by Providence Representatives (Dan Stevens)

Note:  Due to technical difficulties, Providence power point slides could not be viewed. 

 

Network Providers

DS explained that Providence does not use the distinction “preferred” and “participating” providers, who receive different reimbursements.  Participants in Providence’s network receive same level of reimbursements. 

 

Employees can get information on participants in provider network by going to PEBB website, linking to Providence list and clicking on “PEBB Statewide Plan 2010.”  There is a small Portland group (PEBB Providence Choice), that is not relevant to this process.

 

Providence has 13,000 providers statewide, including 7600 physicians and osteopathic providers and 1400 mental health providers.  Except for a few in Portland, all hospitals in the state are covered.  OHSU fully participates with Providence.

 

Providence is currently recruiting additional providers and asks that providers call for information about the Providence network.  DS reported that Providence is more stringent in its credentialing standards for network membership, requiring more continuing education and medical specialty board certification and recertification.

 

Out- of- the-Area Coverage

DS also discussed regional networks, including First Choice in Washington, with a network of over 30,000.  Providence works with Multiplan, a national system, treating its providers as in-network.  Internationally, claims will be treated as an in-network claim and as it would be in the US, according to DS.  He noted a personal situation in Canada involving an emergency room visit at which he paid the cost and was reimbursed by Providence.  Later in the meeting, an OSU faculty member stated that, under Regence, members were not asked to pay and get reimbursed for international health care.   She contended that could be a hardship for most faculty members.

 

Contact Information

The following contact information was provided:

Employees:

Phone:             1-800-878-4445

Email:              pebb.help@providence.com

 

Providers:

Medical:          1-888-568-2482

            Behavioral:      1-800-711-4577

Questions and Answers

 

1.     Will PEBB plan have to follow requirements for mental health parity under state law?

Yes, the same laws apply and there will be no change in mental health benefit design.  Providence representation explained that Providence uses UBH network for mental health practitioners.

 

2.     How will the switch to Providence, a faith-based organization, affect reproductive health and access?

There will be no change in coverage for domestic partners and no change in access for reproductive health services.

 

3.     What happens after 2010?

A two-year contract for plan administration was signed with Providence.  After this period, the contract will be up for renewal and costs and fees may change.  PEBB will watch the claims experience and trends during the two years.  The goal of self insurance is to save premium costs by keeping rates low and make additional resources available to agencies.  

 

4.     Nathan Tublitz:  UO Faculty Senate leadership is very worried about this change and wants to work with OSU Faculty Senate on the issue.  Two questions:  1) Health insurance is experiencing high volatility in today’s market.  There’s a practical concern that PEBB staff do not have the expertise to administer a self-insurance program for such a large population.  2)  PEBB was established to support state employees, now it is shifting to providing insurance.  How can we be assured that PEBB won’t cut benefits to serve best interests of the insurance program over that of employees?  It’s a conflict of interest.

JK:  1)  PEBB is not administering the program, Providence is.  PEBB has hired an actuarial consultant and had expert advisors throughout the self-insurance decision process.  PEBB takes its responsibility very seriously and has proceeded carefully.  2)  PEBB is made up representatives from labor and management (half from each).  Board members want “generous benefits” and want to help people stay well, hence the emphasis on personal behavior in health care.  This is evident in the level of services provided.  JK did not agree that it was a conflict of interest and pointed to the fact that the legislature gave PEBB the option of pursuing self insurance.

 

5.     How widespread is Providence’s network in rural areas?

Providence representative stated that Providence has worked to expand in rural areas and now has 100% of Regence panels in outlying areas, particularly Malheur and Baker counties.  Providence has made exceptions to selection criteria to make this happen. 

 

6.     Could a side-by-side comparison of benefits provided by Regence and Providence be made available online?

The plan design has not changed.

 

7.     OSU employees submitted a number of comments and questions.  How will they get responses to them?

JK:  There were over 40 pages of comments and questions from OSU; it would be an overwhelming task to respond to all of them.  The resources to do so are not available.

 

8.     How does ministry and theology play a role in Providence’s way of doing business?

Providence’s faith-based heritage is important to the organization’s mission and values and is reflected in the high level of service provided.

 

9.     What if a catastrophe occurs (e.g., earthquake, volcanic eruption, etc.) that causes excessively high claims among state employees?

There may be some “acts of God” provisions to provide additional assistance.

 

10.  Why was there no opportunity to comment on such a major change?

A quick decision to implement a year earlier than planned was forced by the high Regence bid.  However, a long process of reviewing the benefits of self insurance has been underway for several years and regular updates provided.

 

11.  PEBB has other plans that have different coverage (e.g., Kaiser).

It’s true that HMOs like Kaiser have different plan designs.