Allegro
Health Benefit Plan Announces Additional Changes in Coverage
Volume CII, No. 10October, 2002
Click here to view chart of HBP changes.
At a July 30 meeting called specifically to address benefit modifications recommended by the health fund’s advisors, significant changes were made in almost all principal HBP insurance provisions.
As reported in the July/August issue of Allegro, the fund had experienced nearly $3 million in losses over the last three years, due primarily to increased premiums, greater usage and higher prescription drug costs. At a June meeting of the fund’s trustees, both the prescription drug plan and the premium reimbursement were modified, effective Oct. 1, 2002.
The following new changes will be effective Jan. 1, 2003.
A global change, which affects how everyone uses the plan, is a restructuring of the annual caps from $50,000 (Plan A) and $5,000 (Plan B) per illness per year to a straight $50,000 and $5,000 per year, regardless of the number of illnesses.
Another change, which affects members who utilize our in-network provider, is an increase in the in-network co-pay from the current $10 to $20.
For those members who live outside the New York/New Jersey metropolitan area or who are traveling outside the area, the trustees are adding the Beech Street network, which has contracts with thousands of providers all across the country.
Additionally, the trustees are currently seeking more information on an alternative New York-area network provider, to replace the current PPO. Blue Cross is one option. Another is to make Beech Street the PPO for all locations, including New York.
There will also be changes which affect members who utilize out-of-network providers.
The first change in this category is an increase in the out-of-network deductible from the current $200 per individual and $300 per family to $500 per individual and $1,000 per family.
The second change in this category is a difference in the way the plan decides how much to pay for “usual and customary” services. The plan has been paying at the 90th percentile rate; it will now decrease to the 75th percentile rate. This refers to how much the plan reimburses you for a service. For instance, let’s say the 90th percentile of a physical exam is $100. This means that 90 percent of doctors charge $100 for a physical exam, according to our insurer’s statistical model. The plan will now reimburse less for that same service, down to the 75th percentile, which is what 75 percent of doctors charge for the service. This is a simplification using hypothetical numbers. The bottom line is that the plan will reimburse less for each service, and those members whose doctors charge at a high rate will receive less than they had in the past.
A third change in this category is a reduction in the out-of-network coinsurance payment from 80 percent to 70 percent of usual and customary services. Note that this lower coinsurance payment will interact with the lower percentile payment described above. For instance, if previously you were reimbursed $100 for a doctor’s visit, which represents the 90 percentile, you will first be affected by the lower percentile reimbursement of 75 percent. Hypothetically, let’s say that you will be reimbursed $75 instead of $100. Additionally, you will be affected by the lower coinsurance payment. Instead of the plan reimbursing you 80 percent of the $75 (which is $60), the plan will reimburse you 70 percent of the $75 (which is $52.50). Again, these are hypothetical numbers which are being used to illustrate the changes in the health plan.
The trustees hope that these changes will encourage participants to utilize in-network providers to a greater degree than in the past. According to the Segal Company, the plan’s advisors, most health insurance plans are experiencing in-network usage of about 65-70 percent of services. Local 802’s HBP network has had a rate of approximately 40 percent. Segal cites this as a significant contributing factor to our losses.
The chart below shows the changes that will take place and the effective dates.
HERE IS HOW THE HEALTH PLAN USED TO WORK… | THIS IS THE CHANGE… | IT TAKES EFFECT… |
A reimbursement limit of $50,000 per illness per year for Plan A and $5,000 per illness per year for Plan B. | The limits stay the same but will now include all illnesses per year. In other words, reimbursement “per illness per year” is becoming a straight reimbursement “per year.” | Jan. 1, 2003 |
How this affects you… Let’s say you were on Plan B. Previously, if you broke your ankle and it cost $5,000 to treat in a given year, you could still see a doctor for a separate illness in the same year and have access to another $5,000. This is no longer the case. Once you reach your limit for all illnesses combined, that’s it for the year. | ||
The Health Plan reimburses at the 90th percentile level if you use doctors outside of the network. | The Health Plan will now reimburse at the 75th percentile level. | Jan. 1, 2003 |
How this affects you… The percentile system is a way for our insurer to determine how medical charges are reimbursed. A higher percentile means more charges are reimbursed; a lower percentile means less. For instance, a doctors’ visit may reimburse $100 at the 90th percentile range but only $75 at the 75th percentile range. Bottom line: the plan will reimburse less for each visit. | ||
The Health Plan reimburses 80% of reasonable and customary charges if you use doctors outside of the network. | The Health Plan will now reimburse 70% of reasonable and customary charges. | Jan. 1, 2003 |
How this affects you… Let’s say you saw a doctor outside the network for $100 and you’ve already met your deductible. Let’s assume that the Health Plan agrees that $100 is the reasonable and customary cost of the doctor’s visit (at the 75th percentile). Previously, you would have been reimbursed $80 for this visit. Now you will be reimbursed $70. | ||
A deductible of $200 per individual and $500 per family, if you use doctors outside of the network | The deductible is rising to $500 for individuals and $1,000 for families | Jan. 1, 2003 |
How this affects you… On the surface, this would appear to be a simple raising of the deductible. It is, but many members don’t understand how the deductible system works in the first place. Let’s say you see a specialist outside of the network for $200 and you have not yet met your deductible. Under the new rules, let’s assume that the Health Plan first determines that $146 is the reasonable and customary cost of the visit at the 75th percentile. Therefore, you will only get a $146 credit towards your deductible – even though you paid $200 out of pocket. You will continue to pay the full amount out of pocket until you reach the new deductible limits. At that point, the Health Plan will begin reimbursing you. Note that this is the way that deductible have always worked with our plan. What’s changing are the numbers: the percentile payout, the reimbursement percentage and the amount of the deductibles. | ||
The co-pay to see a doctor in-network is $10. | The co-pay will rise to $20. | Jan, 1, 2003 |
How this affects you… If you’ve been seeing doctors in the MagnaCare network, you’ve only had to pay a $10 co-pay. This is rising to $20. | ||
The in-network Preferred Provider Organization (PPO) is MagnaCare. | MagnaCare will continue to be the PPO for the New York/New Jersey metropolitan area, for the moment. As of Jan. 1, 2003, members who live outside this area – or are traveling – may now use the Beech Street network. Additionally, the trustees of the health plan are considering making Beech Street – or, alternatively, Blue Cross – the PPO for all services in all locations. | Jan. 1, 2003 |
How this affects you… Keep reading Allegro for updates on this item. | ||
You need $975 in contributions over six months’ time to be covered by Plan A. | The contribution level is rising to $1,075. | The period Jan. 1, 2003 – June 30, 2003 |
How this affects you… You will need $1,075 in contributions instead of $975 to get on Plan A. Call the union to determine how much contributions you have at a given moment. | ||
MagnaHealth HMO is an alternative to Plan A and Plan B, which includes hospitalization. | There are no changes planned for the moment. | N/A |
How this affects you… For details on the MagnaHealth HMO, contact the union’s health department. Keep reading Allegro for updates on this item. | ||
The premium reimbursement plan gives you a rebate of 90% of the money in your health account if you don’t qualify for Plan B and if you pay for qualifying health insurance out of your own pocket. | The rebate is decreasing to 50% | Oct. 1. 2002 |
How this affects you… Let’s say you had $300 in your health account. That wasn’t enough to qualify for Plan B. But let’s say you were covered under an independent health plan that you were paying out of your own pocket. By providing proof to the health department, you used to be eligible to receive 90% of the $300 back ($270). Now, you will only receive 50%, or $150. | ||
Under Plan A, prescription drugs cost $5 (generic) and $10 (brand-name) when you get them at the pharmacy. | Now, there are three levels of co-pay. Generic drugs will have no co-pay. Drugs that our insurer have labeled “preferred” (otherwise known as “formulaic”) will cost $15. Non-preferred drugs will cost either $30 or 20% of the cost, whichever is greater, with a $50 cap. | Oct. 1, 2002 |
How this affects you… If you had Plan A, you used to be able to go to the pharmacy and get any drug for $5 (generic) or $10 (brand-name). Under the new rules, if you can get a generic version of your drug, it will be free to you. If the drug is on our insurer’s “preferred” list, it will cost you $15. But let’s say the drug is neither generic nor preferred and costs $500. The co-payment will either be $30, or 20% of the cost of the drug, whichever is greater, but you will not pay more than $50. Since 20% of $500 is $100, and $100 is greater than 30%, your co-payment should be $100. But with the $50 cap, your co-payment will only be $50. | ||
Under Plan A, prescription drugs cost $2.50 (generic) and $5 (brand-name) when you receive them in the mail. | Now, drugs by-mail will cost $5 (generic), $30 (preferred), or $60 (non-preferred). | Oct. 1, 2002 |
How this affects you… This only affects you if you have been on Plan A and have been receiving you prescription drugs by mail. The costs are increasing as indicated. | ||