Princeton Weekly Bulletin June 22, 1998
PPO replaces indemnity plan
The University is contracting with United Health-Care, one of the nation's largest health care management services companies, to administer a preferred provider organization (PPO) plan that will replace the existing Aetna indemnity plan, effective January 1.
The decision to substitute a PPO plan for the indemnity plan (known as the Princeton Health Care Plan, with both standard and premium options) was made by the Benefits Committee, which is chaired by Provost Jeremiah Ostriker. In a memo to faculty and staff, President Harold Shapiro cited two primary reasons for the change: ''First, faculty and staff have been paying more for doctor and hospital services than is necessary given the discounts now available through organized plans. ... Second, although cost increases have been relatively modest for the past several years, it is expected that medical costs will again increase significantly in the years ahead.''
In its review, the Benefits Committee recognized that any plan that would replace the current indemnity plan must provide participants with choice in the selection of physicians, hospitals and other health care providers, even as it provides incentives to stay within the plan's network. The switch will affect benefits provided to all active employees in the Princeton Health Care Plan. It will not affect retirees over the age of 65.
Discounted rates
The PPO plan focuses on providing quality care at reasonable cost by creating a network of credentialed service providers, who commit to discounted rates. It allows the individual to receive care from within the network but also preserves the freedom to go outside the network (at a higher cost). When the individual chooses to receive care within the network, there is no paperwork, and the individual makes a $10 copayment for office visits and pays 10 percent of other expenses, such as inpatient hospital care, after a deductible has been met. When the individual receives service outside the network, the PPO plan functions more like an indemnity plan: The individual pays for office visits out of pocket and submits paperwork for reimbursement of a percentage of the outlay, after the deductible.
Unlike the University's point-of-service plan through Oxford Health Plans and its various HMO plans, the PPO plan does not require that the member select a primary care physician, and a referral from the primary care physician is not required to receive care from an in-network specialist. Also, under the PPO plan, coverage for preventive care and other office visits provided by an in-network provider will not be subject to the deductible; rather, the member will incur only a $10 copayment. This differs fromthe Aetna plan, which featured high deductibles for most employees (one or two percent of the employee's base salary, depending on the level of coverage selected). These deductibles had to be met before any eligible expenses were covered.
Year's review and consultation
The design for the new plan was developed by the offices of Human Resources and Risk Management after a year's review and consultation, including focus groups with faculty and staff, meetings with the Faculty Advisory Committee on Policy, discussions with an ad hoc faculty group, briefings with other members of the faculty and staff, and consideration by the trustees.
''It is our judgment that nearly everyone currently in the indemnity plan will experience at least some savings and/or improved benefits'' with the PPO plan, wrote Shapiro in his memo to faculty and staff. ''An important feature of the plan is that any resulting savings to the University will be passed back to plan participants through lower deductibles and expanded coverage.''
Actively recruiting local doctors
For many employees, satisfaction with the new PPO plan will depend on their ability to maintain ties to their current providers, according to Director of Benefits Michele Davis. United HealthCare is actively recruiting physicians and other providers in the area, Davis said, and staff members will have the opportunity to recommend providers for recruitment. Human Resources has distributed recruitment forms to staff. ''While submitting a physician's name does not guarantee he or she will be recruited or will choose to participate with United HealthCare,'' Davis said, ''these recom-mendations will help maximize participation by those providers employees already use.''
Davis has already put United HealthCare in touch with hospitals and key physician groups in the Princeton area, as well as in the Trenton area and in Bucks County, Pa., where many University employees live. In addition, she is working to identify locations around the country where University employees travel routinely on business, so that United HealthCare, which is a national organization, can provide a measure of in-network coverage for those employees while traveling.
Providers listed online
Employee premiums for the PPO plan will be set by September, according to Vice President for Human Resources Joan Doig. Information about the health care plan is available through Human Resources online at www.princeton.edu/hr/ben/.
In addition, information is available at United HealthCare's Web site: www.unitedhealthcare.com. The company posts information about service providers on its site, so employees will have access to full information about which providersare in the network before the Open Enrollment period in October and November, when employees must select their University health care plan for the year starting January 1, 1999.