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UT Austin medical insurance plans to change
The University of Texas System,
citing ongoing changes in the health
care field nationwide, has
announced significant revisions in
medical insurance plans for its
employees. These changes will take
effect Sept. 1, 1998.
The University's Triple Option
Point of Service Plan will be
replaced by two alternatives: a
Health Maintenance Organization
(HMO) Plan with out-of-network
benefits (reduced benefits available
even if your doctor is not part of the
group of physicians participating in
the HMO) and a Preferred Provider
Organization (PPO) Plan with
out-of-network benefits. One reason
behind that decision is the pending
sale of Anthem Health, which
administers the triple option plan
now in place.
In addition, the University will not
renew the existing contracts of its
current HMO providers Humana-PCA,
Prudential and NYLCare. Each of
these companies have bid on next
year's contracts and their proposals
are under consideration. Next year there
will be two, rather than three,
contracts awarded to HMOs.
Proposals from various insurance
companies are being reviewed by
the UT System Employee Group
Insurance Office and by consultants
with expertise in the area. Efforts
will be made to ensure that
physicians used by employees in the
past are included in next year's
plans, said Robert Molloy, director
of the Employee Group Insurance
Office.
It is not yet known what the
out-of-pocket costs for the new plan
will be for UT employees. A
2-percent-increase in premium
sharing has been appropriated for
the 1998-99 fiscal year, and it is
anticipated that this will help to
offset premium increases.
Information on premiums and out-of-pocket costs will be available after the board of regents meeting in May. The UT System has contracted with actuarial firms to assist in setting premium rates.
Why UT medical insurance plans are changing
The health care field of today is dynamic in nature: companies are
bought, sold or consolidated frequently. This results in turnover in company management and employees. This nationwide trend has affected UT health plans this year. Among the factors responsible for ruling out triple option plans are:
Anthem HMO's pending sale. The UT System would have to seek a new plan administrator next year even if it had retained the triple option plan.
Triple option plans, which link the HMO
coverage with the indemnity or PPO options, are
not popular with insurance companies. Molloy
said "it was difficult to interest medical plan
companies in bidding on a triple option plan like
UT's because of the difficulties the companies
have in administering such plans."
The claims system used to process the triple
option plan is not Year 2000 compliant. The Year
2000 issue results from the past computer
programming practice of storing the year field as
two digits instead of four. If the problem is left
uncorrected, hardware devices, system and
application software, and other devices controlled
by embedded computer chips could shutdown or
provide inaccurate information. This would have
a significant effect on the quality of service that
UT employees could expect in claims processing.
Changes in ownership of other UT medical plan
companies have occurred, or are possible. PCA
was bought by Humana in September 1997, and
this buyout has resulted in turnover in
management with whom UT had a working
relationship. This spring, the Humana-PCA
office will move out of Austin to Louisville, Ky.,
which could affect the quality of service for UT
employees. Aetna recently has announced its
intention to purchase NYLCare. It also has been
reported that the Prudential HMO is seeking
buyers.
To keep the triple option plan in the 1999-2000
fiscal year, UT would be required by law to go
through the bidding process. This legislative
requirement to go out for bids, coupled with
buyouts of companies and turnovers in
management, led to the decision to request new
proposals for all medical insurance plans for the
1998-99 fiscal year.
What UT is considering in reviewing
bids from possible contractors
One of the primary factors that will be considered
in selecting medical plan carriers is the physician
networks with which the companies have
contracted. One of the main goals in selecting the
new companies will be to cause as little
disruption as possible in the relationships that UT
employees have with their physicians.
Will the benefits packages be similar to
this year's?
There will be great similarities to the HMO and
PPO plans offered this year. An HMO is a type
of health plan in which your care is managed by
your primary care physician (PCP). To see a
specialist and receive HMO benefits, you
normally must receive a referral from your PCP.
A PPO is a network-based plan that allows the
member to choose a physician from a "preferred"
(participating in-network) provider list that
includes both primary care physicians and
specialists.
The following is a summary of the expected
benefits for next year. However, these
benefits could change as a formal
contract is negotiated.
- HMO with out-of-network benefits plan
- For in-network services:
-- Basically the same as those provided by the HMO
under the current Triple Option Point of Service
Plan.
-- $10 copays will be required, with no deductible.
- For out-of-network services:
--$500 annual deductible per person
--Most benefits paid at 70 percent of reasonable
and customary charges
--$3000 maximum out-of-pocket cost per person.
- PPO with out-of-network benefits plan:
- For PPO network services
--$200 annual deductible per person
--Most benefits paid at 85 percent of charges
--$1000 maximum out-of-pocket cost per person
- For out-of-network services for
employee/retiree who resides within the PPO
area:
--$500 annual deductible
--Most benefits paid at 65 percent of reasonable
and customary charges
--$3000 maximum out-of-pocket cost per person
- For out-of-area services for an employee who
lives in an area where there is not a PPO network
of doctors:
--$200 deductible
--Most claims paid at 80 percent of reasonable and
customary charges
--$1000 maximum out-of-pocket per person
When will we know what the new
premium rates will be?
There is no specific information available yet on
the out-of-pocket costs for the new plans for UT
Austin employees. Information on premiums and
out-of-pocket costs will be available when the
companies who will administer the plans have been selected.
When will UT employees find out more
about the new medical plans?
The Office of Human Resources Insurance and
Retirement Group has been assured by the UT
System that information about the medical plans
will be made available in advance of the July
annual enrollment.
The new medical plan recommendations should
be approved by the board of regents in mid-May.
Information about the new plans will be made
available shortly after the approval.
The OHR Insurance and Retirement Group is
developing various strategies to communicate
information to assist employees and retirees in
making the best choices during Annual
Enrollment. Watch for the following over the
coming months:
- Mail messages sent to all employees about
upcoming educational opportunities focusing on
insurance changes
- Orientation sessions for current employees
about the new plans
- Distribution of information before and during
Annual Enrollment
- Benefits fairs planned for the main campus and
Pickle Research Campus
- Future articles in On Campus and the OHR
News
- Information on the Insurance and Retirement
Group web page:
www.utexas.edu/admin/ohr/irg.
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