Among the agenda items for the University Council meeting April 24, 1996 are recommendations contained in the year-end report, below, and those in the Communications Committee report on "Dormitory Privacy and the Proposed Policy on Privacy of Electronic Information,".
The Benefits Committee has reviewed the following areas in detail so far in this academic year.
The details of the discussion are noted below.
Faculty who need time off from work during their tenure probationary periods for the care of family members, particularly children, brought the issue forward to the Senate. Faculty members who may need to take time off to care for family during their probationary periods may not have enough time, depending on the length of the leave, to complete their requirements for tenure. The possible extension of the probationary period for care of family members is under consideration. Other institutions such as Harvard and Yale allow for extensions of the probationary period under certain circumstances for caregiving. The Faculty Senate has asked the Personnel Benefits Committee to review the issue.
There are broad issues associated with leave for caregiving. Two major issues are determining the events which qualify for medical/family leave and financial issues. There are also practical issues such as finding some-one to assume the teaching responsibilities of a faculty member on leave.
In addition to child care, employees may have need of elder care. Some institutions have combined parenting polices with elder care polices. The University could consider recommending broadening the scope of the issue to include elder care.
The issue was brought forward by faculty who need to take time off for the care of small children, in addition to the time off for the birth of a child. On the issues of pregnancy and delivery, it is possible for the University to continue its current practice. Female faculty are provided eight weeks under the University's short-term disability policy for the birth of a child without complications. Currently, full-time faculty have the option of reducing their time by 50% and reducing their pay by 50% for the period of one year to accommodate caregiving. Under these circumstances the probationary period is extended by one year for every two years worked at 50%.
The current policy does not provide flexibility such as 75% time and pay or 25% time and pay. The definition of 50% time for faculty is unclear. Although it is possible to reduce the teaching schedule by 50%, reducing scholarly, advising and administrative activity might be difficult.
It is possible that moving into part-time status would enable the individual to meet his/her caregiving needs, and remain in active status. The question of broadening the issue to staff as well as faculty was raised. A pro-rated benefits package for part-time faculty and staff could enhance an individual's ability to temporarily transfer into part-time status to accommodate family needs. Supporting part-time status with benefits raises several questions. Would faculty and staff be more likely to avail themselves of temporary part-time status if pro-rated benefits were provided? Who does the work while the faculty/staff member is on part-time status? Job-sharing may be one way to allow an individual to take temporary part-time status. The person sharing the job with the regular employee would be given an end date for employment. Appointments with end dates are used throughout the University.
Job-sharing can be an effective way to accommodate an employee's need to work part-time and to maintain continuity in the workplace. It also presents challenges that may make it a less than optimal solution in every situation. There are significant challenges for managers managing a job-share team. Many managers do not want to have to cope with the problems that can arise in a job-sharing team such as lack of communication or one member of the team doing more work than his/her partner. Often job-sharing is most successful when the team members are responsible for working out any of their own problems around issues of communication and work flow and are evaluated as a unit. Success of the team means success for both individuals. Failure of the team means failure for both individuals. If the team is not performing as expected both individuals face the results of poor performance which could mean that both individuals are fired. This type of approach works best when the team members choose to work together rather than being paired together by a manager. This model clearly was more applicable to staff than faculty.
Flexible hours are another possibility. It may be a less desirable approach than job-sharing because the business needs of a unit may not readily accommodate flexible hours. Faculty already have some measure of flexible hours. Beyond their required classroom teaching hours, they have substantial opportunities for designing their schedules.
The Committee discussed the issue of choice and the difference be-tween accident and choice; specifically, the difference between an individual who may need an extension of the probationary period due to an accident or an illness which one did not choose, versus the choice to have children. If extension of the probationary period is allowed for issues such as child care where a choice is made on the part of the individual to have children then what is the duration of the leave time and where is the line drawn on other events in an individual's life that are a matter of choice: i.e. a divorce? The choice to have children is so common that the University must accommodate families in order to attract the people it wants to work at Penn.
The Committee discussed an option noted in the Senate report printed in Almanac March 19, 1996. This would allow a faculty member to be released from duties for one semester at full pay with no need to make up time away from work. The ability to use this option would depend on the size and resources of the impacted department. Large departments may be better positioned than smaller departments to cover teaching responsibilities and pay replacement. The Personnel Benefits Committee can comment on the duration of leave and potentially the range and reduction of duties. If the Committee examines these issues, it may be prudent not to allow for a reduction below 50% time.
The issue has been raised with respect to non-tenured faculty in tenure tracks because of the length of the tenure probationary period. Penn's tenure clock is shorter than at some competing institutions. It can be difficult to develop an appropriate scholarly record if you take a year off for caregiving. One Committee member suggested the possibility of extending the clock to nine years. If there were a nine-year clock, individuals could accommodate their family needs and still have enough time to complete their academic requirements for tenure. Of course, lengthening the probationary period for everyone could have the effect of raising the level of accomplishment required for tenure. Therefore, it is possible that this would only delay the problems faced by non-tenured faculty. Since tenure policies are beyond the purview of the Benefits Committee, the Committee will forward this option to the Faculty Senate.
The current benefits package for part-time faculty and staff can make it difficult for faculty and staff temporarily to assume part-time status. While the individual can maintain his/her medical benefits, he/she must pay the full premium at University rates. It may be possible to treat full-time employees who have temporarily gone into part-time status differently than regular part-time employees and provide pro-rated benefits while the employees are in temporary part-time status. It would be appropriate to require that the employee has to have worked at the University for some minimum period of time (perhaps 1-2 years) as a regular full-time employee before he/she could be eligible for temporary part-time status with pro-rated benefits. The issue of pro-rated part-time benefits will have to be examined as a part of the full benefits re-design effort as recommended by University Council last year.
Traditionally, retirees ages 65 and above receive medical coverage through Medicare. Medicare does not provide blanket coverage; therefore, retirees need to carry supplemental insurance in order to be insured adequately. The University has provided supplemental insurance to its retirees in the form of Blue Cross 65 Special.
Medicare now gives retirees ages 65 and above the option of choosing traditional Medicare coverage or enrolling in a Medicare Risk HMO plan. Under the Medicare Risk HMO plans, Medicare pays the HMO a flat rate per enrolled retiree. The HMO covers the retiree providing Medicare and supplemental benefits. One attractive feature of the Medicare Risk HMO plans is that participants do not have to carry or bear the cost of supplemental insurance.
Medicare has developed the HMO risk program because of the ability of HMOs to deliver care at lower costs. There is some question regarding whether HMOs will be able to continue offering coverage at lower costs once the number of enrolled retirees increases. However, these plans are now available to retirees.
Currently, the University does not sponsor any Medicare Risk HMO plans. As noted above, the only University-sponsored plan available to Medicare eligible retirees is the Blue Cross 65 Special Medicare supplemental insurance. Human Resources wished to expand University-sponsored retiree medical benefits to include Medicare HMO risk plans effective July 1, 1996. This would coincide with the effective date of cost- sharing on retiree medical benefits. The Medicare Risk HMO plans will give retirees who find cost-sharing on 65 Special financially difficult, a reasonable alternative.
Offering additional plans would require the University to hold an annual retiree open enrollment. This would give retirees the ability to change plans once a year in the same fashion as active employees. The government is allowing retirees who enroll in a Medicare Risk HMO the ability to leave the plan within 60 days of enrollment and return to the standard Medicare coverage. Penn retirees who exercise this option, would have Medicare coverage, but would not be eligible to enroll in the University sponsored Blue Cross 65 Special supplemental insurance until the next retiree open enrollment period.
It seems appropriate for the University to offer Medicare Risk HMO plans particularly in light of the July 1, 1996, change in retiree cost-sharing on medical benefits. Under current University policy, current retirees and individuals retiring on or before June 30, 1996 are not required to contribute to the cost of their health care premiums. As of July 1, 1996, retirees will be required to share in the cost of their medical premiums. The Medicare Risk programs will protect future retirees who cannot afford Blue Cross 65 Special premium costs. Medicare Risk options are also cost effective for the University. The University will save approximately $900,00 a year through retiree enrollment in the program. The Committee discussed the Medicare Optional Prescription Riders available under Keystone Health Plan East's Medicare Risk plans. The base product premiums are either $10 a month or $0 a month based on basic plan features. These plans have annual limits on prescription benefits which might become significant restrictions for older individuals with moderate to high use of medications.
Optional prescription riders are available to group plans only, have voluntary use of generic drugs and have no annual limit. These differ from the basic plans in co-pays and premiums. The lower the co-pay, the higher the premium. The Committee endorsed the desire to offer a plan with a prescription rider to provide participants with quality prescription coverage. The goal was to choose co-pay and premium options which are financially reasonable for retirees; particularly those with lower incomes. The Committee discussed the options and recommended a premium $26.10 per month and co-pays of $4.00 on generic drugs and $8.00 on brand drugs.
The final recommendations were:
A $5 minimum co-pay for brand drugs will be added to the program; For generic drugs, co-payment remains 20% for non-mental prescriptions purchased at participating pharmacies;
A separate $500 per individual ($1,500 aggregate per family) out-of-pocket maximum will be added to Comp and PENN Care plans; For Plan 100, out-of-pocket maximum remains $2,000 combined with Blue Cross Major Medical Expenses.
The details are outlined below.
In January of 1995 the Committee reviewed the appropriateness of carving out prescription drug coverage from the Blue Cross plans. Carving out the coverage specifically means that coverage is still provided; however, it no longer falls under the major medical portion of Blue Cross. Rather, the coverage is provided by a stand alone insurance product. The participants experience minor changes in the way they use their benefit; however, the overall effect is relatively seamless for them.
The University explored the issue of carving out prescription drug coverage as a cost controlling measure. Blue Cross had given the responsibility for administrating prescription drugs to Medco, a third party administrator. Blue Cross was essentially a "middle man" between Penn and Medco. The University investigated the possibility of dealing directly with a third party administrator rather than Blue Cross and determined that Penn could save approximately $200,000 in administrative cost by doing so. PCS was chosen as the third party administrator for a combination of reasons, including service to employees and cost. Changing prescription drug coverage from Blue Cross to PCS provided benefits to both the University and faculty and staff: most notably cost savings for the University and easier access to benefits and lower up-front costs for employees. Blue Cross was unable to provide the same service and cost benefits.
Consultation with the Personnel Benefits Committee, research and negotiations with PCS were not complete in time for Open Enrollment 1995-1996. However, the Committee supported the administration in implementing prescription drug coverage through PCS outside of Open Enrollment in late May of 1995.
Consultation with the Committee included discussions on the issue of major medical deductibles and out-of-pocket maximums on the participant's 20% co-pay. Transferring administration for prescription drugs from Blue Cross to PCS meant that Blue Cross could not track prescription drug costs and apply them against a participant's major medical deductible or out-of-pocket maximums. This was an issue for some employees whose prescription drug purchases enable them to meet their deductibles. Given the benefits of the PCS coverage, it was determined that during the first year, a separate deductible for prescription drugs would not be instituted and that the Benefits Office would make a good faith effort to combine the PCS and Blue Cross out-of -pocket maximums. (Under the 100 plan, the Blue Cross out-of pocket maximum refers to the Major Medical out-of pocket maximum. Under the Comprehensive and PENNCare Plans, it refers to the general, comprehensive out-of- pocket maximum). To accomplish this, the Benefits Office has relied, primarily, on employee notification. The employee notifies the Benefits Office when he/she has reached the out-of pocket maximum under Blue Cross or PCS or if the combined out-of-pocket expenses (BC &PCS) have reached the maximum. When notified by an employee, the Benefits Office manually intervenes with Blue Cross and/or PCS to change their systems to reflect that the employee has met his/her out-of-pocket maximum.
The Benefits Office and the Committee recognized that the manual administrative intervention was a stop-gap solution and that the issue of out-of-pocket maximums would need to be re-examined for Open Enrollment 1996-1997. The main goal is to eliminate the current inefficient manual intervention between Blue Cross and PCS which is a less than optimal use of University administrative resources. There is also a need to determine if changes to PCS should be cost neutral or provide cost control measures.
Utilization of prescription benefits has increased over the last year. The estimated increase is $1,750,000. The projected increase over the next year is $2,000,000. One reason for the increase is the steady rise in prescription drug prices. The increase could also be due, in part, to the loss of the "shoe box effect." The "shoe box effect" occurs under major medical benefits when participants pay for services 100% up-front and never file their claim for reimbursement. Under PCS, participants who use participating pharmacies only pay 20% of the PCS cost of the prescription up front and do not need to file a claim. Another possible reason that utilization has increased is that participants are buying more drugs. If this is the case, increased utilization is not necessarily an undesirable action. There are significant controls on prescription drugs. An individual cannot self-medicate. A physician must prescribe the medication and it should be taken as long as indicated by the doctor. If participants are buying more drugs, the implication is that they were not buying what they needed in the past due to the cost. This can have a longer term negative impact on the individual as well as the plan. The individual can experience a longer term illness or unnecessary worsening of an illness/condition and the plan can pay more in the long run for the illness/condition. To the extent that increases in utilization represent patients receiving needed medication, attempts to reduce utilization may have negative health effects, as well as increasing costs in the long run.
One immediate cost-control option is to encourage employees to use PCS's mail service program. The University experiences a 2% cost sav-ings. The main advantage for the employee is the convenience of mail order. The employee is not charged for shipping unless express mail is requested. PCS is identifying participants who purchase maintenance prescriptions. Mail order works well for participants taking maintenance drugs and for participants with family members living out of the area like college students. Providing employees with a financial incentive to use mail order might increase usage.
The Committee examined the current out-of-pocket maximum structure and three possible alternatives that eliminate the administrative inefficiency and offer cost containment measures. Currently, participants in the Blue Cross 100 Plan have a combined out-of-pocket maximum of $2,000. This means that once the participant spends a total of $2,000 out-of his/her pocket on prescriptions and/or other major medical expenses, he/she does not have to continue to pay for additional, prescription drugs or services covered under major medical. In order to reach this point, the individual's total PCS and major medical benefits would have to reach and exceed $10,000.
Currently participants in the Comprehensive and PENNCare plans have a combined out-of-pocket maximum of $1,200. This means that once the participant spends a total of $1,200 out of his/her pocket for prescription drugs and/or comprehensive medical expenses, he/she does not have to continue to pay for additional prescription drugs or services covered under comprehensive medical expenses. In order to reach this point, the individual's total PCS and comprehensive benefits would have to meet and exceed $5,000.
Some plans only pay for generic drugs in order to control costs. Physicians can override this by stating on the prescription that there can be no generic substitutes. The cost savings of a generic plan would have to be measured. It is possible that the cost savings would not be significant because the expensive drugs do not have generic equivalents.
If the goal is to encourage faculty and staff to use generic drugs when possible, it would be just as effective to have no minimum co-pay for generic drugs and a $5.00 minimum on brand name drugs. This would encourage use of generic drugs and be cost-effective for employees who need to purchase brand name drugs.
It is important to reiterate that any changes to prescription coverage should not seek to decrease utilization. The increased utilization recently experienced can be perceived as appropriate. It does not demonstrate that employees decided that they would get more drugs. Individuals cannot arbitrarily increase their prescription drug usage. A physician has to prescribe the drug. The increased utilization is more than likely an indication that employees are now able to use their benefit and are doing so.
When reviewing a component of a benefit plan, it is important to review it within the context of the entire plan. At Vanderbilt when changes were made to the medical plan, there was an increase in the cost of prescription drugs due to increased utilization of mental health drugs. However, the change was cost-effective for the plan because the cost of doctor's office visits decreased, more than offsetting the rise in prescription drug costs.
Several options were considered including:
The final recommendation was an interim solution, to be used for the coming plan year, pending a more comprehensive approach as part of benefits redesign.
The Committee conducted a wide-ranging review of the possibility of offering occupational and speech therapy coverage under the Blue Plans as well as out-of-network coverage under PENNCare. After review of the options by Benefits staff, and consultation with the carriers, the Committee recommended extending coverage on a trial basis, with a review of utilization and costs after 2 years. The proposal calls for:
100 Visits Maximum is a combined maximum for both occupational & speech therapy and per plan year per individual; Pre-certification will be required (administratively it will be done for the Comp & PENN Care plans);
Occupational & Speech Therapy will be covered for conditions which are expected to improve over a reasonable time (definition to be developed with Blue Cross.)
A summary of the issues considered is included below.
Occupational and speech therapy are not covered under the current Blue Cross/Blue Shield 100 plan. Employees have requested that the Committee examine the issue of adding coverage for these therapies under the 100 plan. The issue was not resolved last year and carried forward to the current Committee.
The Benefits Office has consulted with Blue Cross on the cost of adding the coverage and the appropriate level of coverage. Blue Cross has indicated that adding the coverage should not impact the University's costs. Although not a part of current plans offered at the University, Blue Cross offers coverage for occupational and speech therapy under other plans it administers elsewhere, such as its HMO and Personal Choice plans. Those plans allow a maximum combined total of 50 visits for speech and occupational therapy per covered individual per plan year. The individual may use all 50 visits for occupational therapy or speech therapy. He/she may also split the visits between occupational and speech therapies (i.e. 30 visits occupational therapy & 20 visits speech therapy). However, the plans will only cover a combined total of 50 visits.
The Benefits Office recommends adding the coverage with a total combined maximum of 100 visits per covered individual per plan year, and a pre-certification requirement. The higher maximum of total combined visits is recommended because it is in line with the level of coverage provided under the Blue Cross/Blue Shield 100 plan, and there is concern that 50 visits would not provide enough coverage for an individual with serious needs. The pre-certification is recommended as a utilization gate. It is standard practice for physicians to refer an individual for occupational or speech therapy. Typically, individuals cannot self-refer for these ther-apies. Physician referral along with pre-certification will ensure that only those individuals with a medical need will receive therapy.
There was some concern that Blue Cross had not adequately evaluated the cost impact of adding the coverage. The question was posed that if adding coverage does not add cost, then shouldn't Blue Cross reduce the premium if the additional coverage is not adopted? Since the University is self-insured under major medical, any additional cost will be absorbed by the University. Blue Cross's underwriting department reviewed the impact of the additional coverage. There is some anecdotal evidence that indicates Blue Cross's estimate is accurate. The University receives one to two requests a year for coverage of occupational and/or speech therapy. This would seem to indicate that utilization would be low. It is unlikely that Blue Cross would offer this coverage under Personal Choice if it were expensive. The Committee would still prefer to examine some utilization data to determine the accuracy of the projected cost impact.
The Committee also suggested requiring a small co-pay such as $5.00 as a part of the coverage. Co-pays, even low co-pays, tend to discourage indiscriminate use of benefits. At the same time, a $5.00 out-of-pocket expense is not likely to discourage individuals who need the therapy from seeking treatment.
The Committee questioned the need to set the total combined maximum number of visits at 100 rather than 50. Medical necessity can require more than 50 visits for occupational therapy. Occupational therapy is often significant therapy. It teaches life skills such as working in a kitchen from a wheelchair, etc.
The Committee recommended that the University add coverage for occupational and speech therapy to the Blue Cross/Blue Shield 100 plan, as described above. The Committee further recommends that after a two year period, the University review utilization data to determine if the cost projections are accurate. If the coverage does add to the cost of the plan, the Committee recommends modifying the coverage to control cost.
Throughout its discussions, the Committee noted that many of these considerations and proposals reflected the need for a more coordinated approach to benefits. The extreme complexity of the health plans, as well as their expense, makes them targets for modification in the near future. It should be possible to achieve substantial simplification of the options and administration of the system without disadvantaging employees.
Personnel Benefits Committee, 1995-96
David Hackney (radiology), chair
Patricia Danzon (health care sys)
Robin Goldberg-Glen (social work)
Paul Lloyd (romance languages)
Karl Otto (German)
Carl Polsky (accounting)
Sheldon Rovin (dental)
David Silverman (AMES)
Robert C. Hornik, communication (liaison, Senate Committee on the Economic Status of the Faculty)
Bonnie Gibson (ISC)
Harriet Joseph (SAS)
Daniel Shapiro (planning analysis
Pat Noel-Reid (chemistry)
Mary Adams (law school)
Alfred Beers (comptroller)
Clint Davidson (vice president, human resources)
Phyllis Lewis (director human resources)
Barbara Lowery (associate provost)
Al Johnson and Fina Maniaci (assistant managers, benefits counseling)
Volume 42 Number 28
April 16, 1996
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