Statement of California: UC System Seeks Golden Touch by Introducing PPO

Amid a changing health care environment and revamp of the benefits portfolio, the University of California rolls out UC Care, a self-insured PPO.

Kelley M. Butler

Officials at the University of California, which covers hundreds of thousands of lives under its benefit plans throughout the Golden State’s 10-campus system, watched health care costs rise exponentially year over year with no signs of slowing.

How is their problem different from any other large employer when it comes to health care? It isn’t.

UC’s solution is unique in that the statewide system is using its own providers by creating its own medical plan. University of California officials developed UC Care, a PPO designed specifically for UC and administered by Blue Shield of California. Beginning in 2013, Lori Taylor, UC executive director of self-funded plans for risk services, and her colleagues began drafting the blueprint for UC Care. A thorough cost analysis yielded a self-insured plan, and an exhaustive procurement process led the university system to partner with Blue Shield to strengthen the care network anchored by its medical centers. The effort took about a year, with UC Care making its debut Jan. 1, 2014.

Although many employers now are reaping the benefits of self-insurance — statistics from the Kaiser Family Foundation show 61 percent of U.S. covered workers are in a self-insured medical plan — few have the advantage of having a ready-made network like UC.

The new plan represented uncharted territory for the university system, Taylor said, but “we knew absolutely that we were doing the right thing with UC Care.” At the same time, “we recognized we were facing an uphill climb.”

Part of that uphill climb was the simple fact that most people are wary of change — the UC community proved no different. Compounding that inherent resistance to something new was that in the midst of the UC Care rollout, the university system also announced it was eliminating three plans and one carrier — ones that were familiar and popular to UC’s very involved and very vocal faculty population.

‘We really believed that once everyone understood UC Care’s value, choice and flexibility, the plan would be appreciated more.’
—Lori Taylor, executive director of self-funded plans for risk services, University of California

“This was part of a major change, the biggest shift in health benefits for the university in more than 10 years,” Taylor said. “Plus, the backdrop was the huge change that our nation’s health care system is going through. UC medical centers are in the thick of that change, driving innovation and new models of care, while having to be extremely efficient.”

The advancements being pushed by the university system through its medical centers and the creation of UC Care has earned them a few noteworthy admirers in the region.

“What the University of California has pushed forward with UC Care is really remarkable,” said Ed Bray, senior vice president of Ascension Insurance and Benefits Solutions in Walnut Creek, California. “The future of the employer-based health benefit system depends on companies throwing out the playbook and creating a new approach. Costs aren’t going anywhere. People will always have health risks. So, bending the trend means it’s incumbent upon employers to think smartly and act boldly without being afraid to make some people unhappy or uncomfortable.”

Catching Flies With Communication

To say a segment of the UC faculty was “unhappy” might be an understatement. When three widely used and well-liked medical plans were eliminated, an outspoken swath of the university system’s community made UC Care their scapegoat despite the fact that the decisions to terminate the plans and create UC Care were made independently. Balking at out-of-pocket costs and inconvenient provider options, dissatisfied faculty took to blogs and other online forums to protest UC Care. In particular, faculty who didn’t live or work near a UC Medical Center saw the plan as unfair. “UC (Doesn’t) Care” became a familiar headline.

To turn the tide and educate employees on the new health plan, UC went full-tilt with a communications campaign about UC Care. Many called it a marketing blitz, but Taylor disagreed. “We weren’t really trying to ‘sell’ people on UC Care — not in the commercial sense,” she said. “What we did want to do, though, was let employees know exactly what was changing, and that UC Care was an option for them as they were looking to switch plans.”

In doing that, Taylor wanted “employees and their families to know that it was us — their colleagues at UC, not some faceless company — that was thinking of them, their families, their finances and their needs,” she said.

As year-one enrollment approached, Taylor and her team sent targeted mailers with specific messages to employees whose plans were among those being eliminated to inform them about their replacement options — including UC Care — and which plans matched the features of their current benefits. They also mailed communications to employees whose plans were remaining, helping them see how UC Care compared with their current plan.

It was all contained under a campaign umbrella led by the university system’s internal communications group and supported by outside consultants and campus leadership. “We used big, colorful photography that reflected the diversity of our population to help people connect to the messages and drove them to a website that was unique for UC Care. The website housed all of their comparison information, tools and resources,” Taylor said. “We really believed that once everyone understood UC Care’s value, choice and flexibility, the plan would be appreciated more.”

In its first enrollment period in the fall of 2013, UC Care posted the university system’s third-largest plan membership at more than 46,000 members, exceeding the year-one enrollment goal by 6 percent.

“We certainly were pleasantly surprised when the enrollment numbers came in. We had high hopes, of course, and believed in the plan. But you just never know how people will respond,” Taylor said. UC’s open enrollment period for 2015 was still underway at deadline. “The enrollment was affirmation that we’d created a solid plan with a solid educational component and support resources to help members with the transition.”

What the team didn’t expect though, were UC Care’s demographics, which skewed older and sicker than anticipated. Among first-year enrollees, 50 percent of members are age 45 or older (vs. 44 percent for non-UC Care), and 13 percent are retirees. The plan has about an even split along gender lines.

Lessons Learned

Despite being off the mark with demographic projections, Taylor still believes a self-insured plan was the right move. Although UC Care isn’t the university system’s first or only self-insured plan, it is now the largest. “Many employers, especially large ones, recognize self-insurance as a way to have a positive influence over employees’ and retirees’ access, cost and quality of care — in a way that fully insuring medical benefits just doesn’t. Self-insuring also puts us in line with the consensus of similarly large-sized organizations — most of which self-insure.”

She added that the university system learned important lessons while developing and implementing UC Care that leaders will apply to this year and beyond. “I think the biggest thing we learned is that you can’t underestimate how difficult understanding health insurance and navigating the health care system is for people,” she said. “It’s just incredibly complex, regardless of the support and information we provided and regardless of how sophisticated our audience is in other areas.

“Also, the value of getting feedback from employees and members is endless. In an environment like UC, we constantly hear from members about what they want, need, like and don’t like. Fortunately, we have created a team that appreciates that constant dialogue and can respond in kind.”

Finally, Taylor credits the strength of the UC Care team as being the difference-maker. “Having the right people who are committed to creating something outstanding made all the difference.”

To be successful, “UC Care needs to evolve and improve,” says Dr. John Stobo, who oversees all health-related activities associated with the UC system. “Our goal is to offer self-insured health plans that capture the quality of care delivered by our medical centers and associated providers, yet are affordable at the same. So, cost containment is a major challenge.”

Bray agreed: “Ongoing cost containment will be an issue just like it is for everyone, so they’ll have to be vigilant. The good news is that with an engaged UC population, there will be an ability to make meaningful improvements to the process.”

Taylor also acknowledged the technical refinements that need to happen. In general, though, she said, “we think the future is bright.

“Ongoing member education is a big drive for us, particularly focusing on how to be a better health consumer. We’ve created UC Care University, an online education series that takes a deeper dive into helping members understand the plan and use their benefits well. I think the strongest push will be connecting with and communicating to members. If we succeed with that, we feel confident that reaching all of our other goals will follow.”

UC Care: At a Glance

UC Care is a self-insured PPO plan that the University of California system says was “created by UC, for UC.” Members have in- and out-of-network coverage for care with doctors and facilities worldwide.

There are two in-network tiers:

• UC Select — where members pay copays for covered services with no deductible.

• Blue Shield Preferred— where members pay 20 percent coinsurance after the deductible.

UC Care is a fit for employees who want:

• Access to providers without a referral.

• No deductible and fixed copay (for using providers in the UC Select network).

• Coverage when traveling or living abroad.

• Coverage for themselves and/or family members living outside California.

—Kelley M. Butler

[Source]: WorkForce.com