PEBB Set to Overhaul Medical Insurance Contract

Dr. Alan Bates, a Democratic senator from Medford, helped craft a fixed budget for the Public Employees Benefit Board that would be able to control costs through innovation. The doctor also chided PEBB on offering perks through self-reporting in its smoking cessation program.


Aug. 21, 2013 — The Public Employees Benefit Board released its blueprints for a new contract design at its August meeting, asking companies that will either administer or insure health coverage for Oregon’s public workers to offer more innovative plans that will hold down costs while actually improving care.

It’s the first major request for proposal or RFP to deliver medical care for PEBB since 2004, and the cost of the plan is intended to fit into PEBB’s capped budget of $1.5 billion for the next two years.

Gov. John Kitzhaber’s veto last week effectively installed that capped budget, which includes dental, life, long-term care as well as medical insurance — which has had trouble controlling costs. The governor’s healthcare policy advisor, Mike Bonetto, said the governor wanted to send a clear signal that the budget controls would not come from state employees either eating higher costs or receiving poorer care.

Sen. Alan Bates, D-Medford, told The Lund Report that PEBB has a lot of room to produce savings and meet its goals. He said administrative costs from Providence Health Plan had been excessively high and Providence or a new bidder would have to face more scrutiny.

Providence has administered a self-insured plan for PEBB since 2009, after taking over from Regence BlueCross BlueShield. Public employees have also had the choice of a fully insured plan from Kaiser Permanente’s HMO.

“If you’re running a budget, you try to reach that budget,” Bates said. “Before they had an open-ended card. Whatever they spent, they charged the state and walked away. We don’t want to do it that way.”

Bates said he had worked all legislative session on creating reasonable budget caps for PEBB and the Oregon Educators Benefit Board and was happy to see Kitzhaber restore them with his veto.

The lawmaker said if it looked like PEBB or OEBB would be unable to stay within their budget, the Legislature could make a tough vote to add money, but without the caps, healthcare costs will continue to spiral out of control.

PEBB’s request for a contract proposal includes several key parts of the healthcare transformation that coordinated care organizations are implementing for the Oregon Health Plan:

• “Patient-Centered” Primary Care Homes: The successful contractor will increase the number of these, directing patient care through a family physician or nurse practitioner. Often paid through a per member global budget, the primary care provider is given financial incentives to hire community health workers or make other steps to ensure overall wellness rather than getting paid per procedure.

Bates, an osteopathic primary care doctor in Jackson County, said his own clinic had been moving toward the primary care home model, adding evening and weekend hours. He said PEBB could be a driver in changing the system as it crafts its RFP — rewarding insurers who contract with primary care providers who keep longer hours, which helps keep patients away from high-cost emergency rooms.

• Greater use of electronic medical records to streamline care.

• Patient safety — the contractor will agree to require hospitals to correct mistakes or treat illnesses acquired in the hospital, but refuse to pay for them.

• Payment reform — the contractor will take steps to hold down medical inflation with global, capped budgets for providers, in primary care homes or otherwise.

• Member engagement — the health plan will engage members in culturally competent manners.

In addition, the contract request asks the health insurer to include and build on the health engagement module that public employees have used to quit smoking or lead healthier lifestyles. The new contract will include the online personal health assessment, as well as weight management programs, worksite wellness programs and gym subsidies.

Bonetto praised PEBB for taking up its health engagement module, but Bates said the current program leaves a lot to be desired, particularly its flawed method of reducing smoking.

PEBB has trumpeted figures that show the smoking rates of public employees at about 3 percent versus 15 percent of the general population. Bates, working as co-chairman of the Joint Ways & Means Subcommittee on Human Services, asked PEBB to verify that information, and he discovered those figures were all self-reported — no one was following up to see if employees were telling the truth.

Incredibly, he said despite this lack of simple safeguard, workers who report they’ve quit smoking are rewarded with lower cost-sharing, all on the honor system.

“I’m not saying my patients lie to me, but they hedge the facts,” Bates said. He said nicotine blood levels can be monitored by their primary care provider. Not only does self-reporting allow people to save money without quitting, it does little to help them stop the cancer-causing habit. “You have to work with people to get them to quit.”

Christopher David Gray can be reached at [email protected].

News source: