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Explanation of Changes to PEBP Budget

11 May 2011 3:17 PM | Anonymous
The NFA's Sondra Cosgrove, of CSN, filed this report from Carson City, Monday, May 9.

The Joint Senate Finance and Assembly Ways and Means Committee voted to accept the Public Employees Benefits Program changes. There was spirited debate over these changes, but without any extra funding, there were few alternatives available. Two issues received the most attention: southern HMO participants subsidizing northern HMO premiums, and the number of sacrifices public employees are being expected to shoulder.

A number of committee members asked why the northern and southern HMO rates are being “blended.” The Executive Director of the PEBP Board stated that the Board felt it was an equity issue; that all employees should be treated equally. Assemblypersons Maggie Carlton and Marcus Conklin specifically rejected this argument and asked why participants are not paying only for the services they themselves receive.

It was explained that the HMO contract is more in the north than in the south, so up to now northern HMO participants have paid a higher premium than southern participants. Under the PEBP Board changes, the southern premium will be going up more than is warranted under the southern contract to keep the northern premium from going up even more. Some of the southern legislators (not all) voted to not allow this blending, but they were unsuccessful.

It was also noted that, in addition to these drastic changes to health, retirement, and life insurance costs, public employees also are being asked to accept a 5-percent salary reduction. Many committee members noted that this seemed to be a disproportionate share of the sacrifice, but without any other funding, nothing could be done to ameliorate this inequality.

A motion to send a Letter of Intent to PEBP Board asking them to review this item failed on a close vote. However, the PEBP Board has a mechanism to offer some temporary relief if it has the funding to cover it.

In addition, Governor Sandoval's plan to cut the health subsidy for part-time state workers – which would have affected higher education more than any other entity – failed in a close vote.


  • 12 May 2011 9:33 AM | Kevin Gulliver
    In addition to the inequity of the HMO plan, it should be noted that the fees considered to be reasonable and customary are higher in Northern Nevada. Additionally, the following concerns have not been addressed:
    1. Will employees will be responsible for fees charged by providers that are above what the third party administrator (TPA)considers usual and customary.
    2. Are providers obliged to accept the reimbursement considered usual and customary by the TPA as payment in full?
    3. If the PPO providers are not obliged to accept the TPA determination of usual and reasonable charges as payment in full will the employee be able to apply fees paid toward their deductible?

    PEBP has reported that the fees charged by providers and agreed upon by the physician and PPO are proprietary and will not be released to the employee. Employees may request average charges for a provider if they call the TPA with the providers number, and billing codes in addition to other information. It is unrealistic to think that this would be possible or practical for most employees. In addition since the fees agreed upon by the PPO network and the provider are not necessarily those that the TPA considers usual and customary, employees may be responsible for expenses significantly above and beyond what will be credited to the employees deductible.

    Referring to the new health plan as a Consumer Driven PPO High Deductible Health Plan is an oxymoron. A health insurance plan that restricts participants in choice of providers, prohibits participants from obtaining comparative cost and quality data, and potentially credits the participant for only a portion of their billed charges is not a consumer driven plan.

    Consumer driven health plans have been implemented by other states and organizations, however it does not appear that any of these plans restricted participants to use of a PPO network or used a tiered deductible allocating expenses to either a in-network or out of network deductible. In addition it has been unclear that consumer driven high deductible health plans actually resulted in any significant savings beyond the first 2 - 3 years of plan implementation.

    This will be an interesting experiment, hopefully the employees will not suffer the consequences of these decisions.
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