PEBB Raises State Employee Costs for Out-of-Network Hospitals

Meanwhile, the board voted to scale back increases for other non-contracted providers rather than shift cost for these services to state workers. After meeting tight budget restraints for several years, PEBB saw costs soar in 2016 to 7 percent.

State workers will soon have to pay more for going to a hospital outside their health insurance network, but the Public Employee Benefit Board voted Tuesday to avert increases in coinsurance fees for other non-contracted providers.

Currently, state workers pay 15 percent of the cost for hospital services that are in their health plan’s network, and 30 percent for those outside the network. But starting in January, the price of going outside the network will shoot up to $500, plus 40 percent of billed services.

“Out-of-network hospitals do not have a contract,” explained Loretz. “We don’t have as much control over the cost.”

Most public employees will have three options for insurance in 2018, and each covers a different set of hospitals in the Portland Metro area.

Moda Health includes Legacy Health hospitals in its plan network, but not Providence hospitals; Providence Health Plan includes the Providence hospitals, but not the Legacy hospitals; while Kaiser Permanente covers only Kaiser’s hospitals.

State workers who choose Moda or Providence will have to pay higher fees if they use a hospital outside their network; in general, the Kaiser HMO does not cover hospital fees outside its system at all.

The decision to raise out-of-pocket costs for public employees only for hospitals came after some debate, and required the PEBB board to authorize just over $1 million from reserves to avoid raising the coinsurance costs for the other services for state workers..

PEBB Director Kathy Loretz said the fees for the other services, such as out-of-network primary care physicians or chiropractic services, had tentatively but inadvertently been raised without the full consent of the board.

“It’s not an acceptable solution to corral costs,”said board member Bill Barr, since PEBB has a mandate to save money without simply shifting the burden to public employees. Hospital costs, which have been rising unsustainably, appear to be an exception.

Although PEBB has a reserve in excess of $300 million, board members disagreed on how easily the reserve could be used to backfill coverage adjustments such as this one. PEBB is bound by cost controls capping growth at  3.4 percent a year and must rely on those reserves if costs exceed that threshold. Last year, costs rose nearly 7 percent.

Earlier in the meeting, Barr, a former Cambia insurance executive, was named chairman of the PEBB board for the final three months of 2017, succeeding Mark Fairbanks, who quit the post and his job as chief financial officer for the Oregon Health Authority at the end of August, departing with former OHA Director Lynne Saxton.

The new chief financial officer, Laura Robison, took Fairbanks spot on the PEBB board, but with Barr’s lengthier experience on the board, he was chosen as a more suitable management representative for chairman.

Loretz also announced that Theresa Cross had been hired from the OHA Public Health Division to serve as the new wellness manager for PEBB. She will be tasked with coordinating the myriad of wellness programs at PEBB in a way that is evidence-based and cost-effective.

Reach Chris Gray at [email protected].

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