Campus News - December 10, 2001

Human Resources
Rising cost of healthcare means changes for insurance

By Susan A. Carkeek Associate Vice President/ Director Human Resources

The University’s employee health insurance contracts will expire at the end of this fiscal year, and we are preparing to negotiate new contracts for 2002-2003. To gather input from campus, the Human Resources Benefits Office has surveyed staff and faculty for their perceptions of our current plans and what they would like included in the new contracts. We appreciate the participation of all of you who responded. The most significant results of the survey indicated that you want choice and that you do not want increased payments. Those responses point us to find a way to continue to offer variety at reasonable rates.

With the rising cost of health care and UNM’s high utilization rates, this is no easy task. If we continue with the same four vendors we now use—Lovelace, Presbyterian, Cimarron and Cigna— we expect significant rate increases. This is due in part because UNM employees can choose among the four carriers; no one carrier has a large number of employees. Also, the variety of plans makes plan administration complex and drives up costs.

We are now developing a request for proposals to allow insurance carriers to bid on employee health plans. A decision will be made in March. Open enrollment will be in April, and the new contracts will begin July 1, 2002.

We are asking vendors to provide bids for three possible alternatives: 1) Status Quo – four carriers, three of which offer HMO plans and one PPO plan; 2) Dual Option Only; and 3) Dual Option plus HMO.

For the Status Quo, little would change except costs, with increases projected to be double digit.

Under the second alternative, a Dual Option Only plan, we would offer one insurance plan for all employees. However, that one plan would combine an HMO model with a new “out of network” benefit for everyone. In the HMO portion, you would have a primary care physician who coordinates referrals, and fees are co-pays. In the out-of-network portion, you could select any provider without a referral; fees for this portion are subject to a deductible, and a percentage of the cost is reimbursed. You could choose the HMO or out-of-network provider at the point you obtain services. Although this option would probably be more expensive than the current lowest HMO carrier, the new out-of-network benefit would be available to all employees and having only one plan would significantly increase our ability to negotiate rates.

The third option being considered, Dual Option Plus HMO, would reduce our current offerings from four carriers to two carriers. You would have a choice between a new Dual Option plan, as described above, or an HMO-only plan. It is intended that the HMO would provide a less expensive alternative to the Dual Option plan. With these two offerings, the out-of-network option would be available for those who want it, we would have some increased negotiation leverage, and fewer employees are likely to have to change physicians as may be the case under the second alternative where there would only be one insurance plan.

We understand how important medical benefits are to you. Our goal is to choose the best option for all staff and faculty. A Staff Town Hall will be held in late January to discuss the topic further. Employees will receive email notification about the Town Hall when plans are finalized.

The University of New Mexico
Albuquerque, New Mexico USA
Copyright ©1998 The University of New Mexico.
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