wfn.org | BOARD OF PENSIONS GREATLY EXPANDS HMO PROGRAMS

[PCUSA_NEWS@ecunet.org]

17-Aug-95

95280     BOARD OF PENSIONS GREATLY EXPANDS HMO PROGRAMS 
 
                      by Jerry L. Van Marter 
 
PHILADELPHIA--Spurred by the success of five pilot projects, the Board of 
Pensions (BOP) has authorized the establishment of Health Maintenance 
Organizations (HMOs) in 22 additional presbyteries by the end of the year. 
 
     Initial results of the HMOs in the presbyteries of Chicago, Greater 
Atlanta, Philadelphia, San Francisco and San Jose showed savings of between 
24 and 37 percent by persons using an HMO rather than the board's indemnity 
plan for major medical coverage. 
 
     Of the 22 new presbyteries, 12 are in California, where population 
density and a highly competitive HMO market offer the highest cost savings. 
 
     Presbyteries where the board will be enrolling plan members in HMOs 
this fall for start-up January 1 include Baltimore, Detroit, Grace, 
Giddings-Lovejoy, Grand Canyon, Hanmi, James, Los Ranchos, National 
Capital,  Pacific, Pittsburgh, Redwoods, Riverside, Sacramento, San Diego, 
San Fernando, San Gabriel, San Joaquin, Santa Barbara, Santa Fe, Stockton, 
and Twin Cities Area. 
 
     John Cookson, a consultant  to the board from the actuarial firm of 
Milliman and Robertson, sounded the only note of caution.  "My only 
concern," he told the board at its Aug. 3-5 meeting here, "is that some 
carriers will offer low-ball introductory rates and then submit hefty 
increases on renewals." 
 
     Stephen Ballard, director of research for the board, responded that 
such was not the case in Philadelphia, where the HMO is up for renewal 
later this month.  The board authorized renewal of HMO policies for 1996 at 
a rate not to exceed a three percent increase over 1995. 
 
     In a related action, the board approved enrollment of plan members in 
the state of Alabama in a Preferred Provider Organization (PPO) 
administered by Alabama Blue Cross/Blue Shield.  That PPO has the market in 
Alabama "sewed up," according to board officials, precluding HMOs as an 
option.  The PPO arrangement affects plan members in the presbyteries of 
North Alabama, South Alabama and Sheppards & Lapsley. 
 
     The success of the HMO pilots highlighted what continued to be a 
remarkable turnaround for the board's major medical program.  BOP 
Healthcare Committee chair Beverly Dodson reported that the current fund 
balance in the major medical program is $30 million.  As recently as 1989, 
the major medical program was $20 million in the hole. 
 
     With reserves continuing to climb, the board asked its staff to 
conduct research to determine an adequate level of reserves to keep the 
major medical program financially healthy. 
 
     In other actions related to the major medical plan, the board: 
 
     * deferred until its October meeting a proposal to overhaul the free 
coverage provisions for plan members, their survivors and ex-dependent 
children in times of transition (which currently provide 30, 60 or 90 days 
of free coverage depending on circumstances). 
 
     * deferred until October consideration of alternate ways of funding 
major medical continuation coverage for retired members, which is currently 
funded by a portion of active dues. 
 
     * approved a change from Intracorp to United Healthcare for 
utilization review services, effective Jan. 1, 1996; in addition to being 
less expensive, United offers a 24-hour, 7-day "NurseLine," which provides 
information and advice about medical treatment. 
 
     * discussed a questionnaire for to retirement plan members about 
increased subscription rates for the medicare supplement program or benefit 
reductions. 
 
     In other favorable financial reports, the board learned from 
Investment Committee chair James Tilley that the board's investment 
portfolio earned a 12.5 percent return during the first half of 1995, and 
President John Detterick said current projections indicate 1995 operating 
expenses will come in $550,000, or 2.5 percent, under budget. 
 
 

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