Legislative money reduces need to change benefits plan and rates

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An infusion of $18 million from the state made the task before the Public Employee Benefits Program Board much easier Thursday.

The plan was projected to lose as much as $17.4 million by the end of this fiscal year. Even with the $12 million premium hike proposed by Gov. Kenny Guinn, Executive Director Woody Thorne estimated that would leave the benefit plan with a $4.2 million deficit by the end of December.

To make it through the end of the fiscal year, he estimated the benefits program would have to increase premiums 21 percent for state employees and their dependents -- by more than 50 percent for nonstate participants -- or cut benefits.

"As you can see, we would have had to decimate the plan," he told the benefits board Thursday.

But with an infusion of state cash, they were able Thursday to make relatively minor changes to at least get through the next legislative session.

Guinn asked the Legislature, meeting in special session last week, to consider increasing state premiums $12 million from January through June 30. Lawmakers went one step further than Guinn, boosting his cash infusion to $18 million by starting the higher state contributions in October instead of January.

Thorne said that put the plan about $1.8 million back in the black at year's end.

As a result, he said, "we can do much more moderate changes."

But he said changes were still needed to restore the plan's depleted reserves which should total some $20 million.

The biggest single savings recommended was to eliminate Universal Health Network from the list of state provider networks. Thorne said the move will save $1.3 million over six months.

But that was also the recommendation board members most objected to. Several members argued they want more information before agreeing to something that could restrict access in rural areas as well as Las Vegas and Reno. And the companies that would be eliminated argued they can reduce rates to keep state business or make other changes to provide better service.

After debate, the board agreed to member David Smith's motion asking staff to develop more detailed information before the next plan year starts.

But not adopting the recommendation reduces the projected reserves from $5.5 million the staff had requested to $4.2 million.

The board accepted Thorne's other recommendations including to put the dental plan into Diversified Dental Network dentists -- a Preferred Provider organization -- saving up to $600,000 over the six months between January and June.

The board also agreed to raise the current maximum out-of-pocket expenses for plan members from $2,000 to $2,400 per person and from $4,000 to $4,800 per family when the providers are within the state's network.

That would raise the maximum cost per year for using providers outside the network from $7,500 to $8,500 per year per individual and $15,000 to $17,000 per family and generate nearly $900,000.

The board's easiest change was to allow utilization reviews by phone instead of requiring on-site visits. This would save $147,462 over the last six months of fiscal 2003.

There are a number of other changes the board must still review today including setting state rates for different categories of participants from employees with a spouse, those will just children and for retirees as well as nonstate employees covered by the plan.

The overall changes are relatively minor or, in fact, reductions, for most participants under the state plan.

But Thorne said the situation for nonstate members of the plan was more difficult.

"Increases for the nonstate participants are significant to say the least," he said.

He said the best recommendations he can make would increase nonstate rates by 60 percent in the self-insured plan. However, the proposal he made would leave nonstate HMO rates about where they are now.

The second day of the meeting begins at 9 a.m. in the Legislative Building.


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