UPEA met with PEHP to discuss Federal Health Care Reform

Last week UPEA met with PEHP to learn how federal health care reform will potentially affect PEHP. Through reading the two federal health care bills, PEHP has speculated how the mandates will probably affect them and if there will be additional costs. PEHP does not yet know what those additional costs will be, as that is still being determined. UPEA will continue to stay updated regarding this issue.

The two federal health care reform bills are: the Senate Bill - Patient Protection Affordable Care Act - signed 3/23/2010 and the House Bill - Health Care and Education Reconciliation Act of 2010 - signed 3/30/2010.

The purpose of these two health care bills are to improve access to health care. There are several mandates within the bills, and some of these mandates apply to only grandfathered plans, new plans or both. A grandfathered health insurance plan is a plan that existed before 3/23/2010 and does not make significant changes to their plan to lose grandfathered status. PEHP currently believes they are a grandfathered plan; however they have not yet been informed of their status.

Grandfathered Plan Mandates:

After 9/23/2010

1. No pre-existing condition exclusion for children under the age of 19.

• Currently PEHP requires a 9 month waiting period.
• This will be an additional cost for PEHP.

2. Two types of limits on benefits:

• No lifetime limits on dollar value benefits or type of care
• Only allowed "reasonable" lifetime or annual limits on nonessential benefits.
• PEHP plans to change to annual limits for both types of changes to keep this as cost neutral as possible.

3. Dependent children will be allowed to stay covered on employee health insurance plan until age 26, regardless of whether or no they are a dependent. This does not apply to the child if they have their own group coverage.

• Spouses or dependents of the dependent are not covered, only the dependent child.
• Only allowed to be added to insurance plan at the insurance carrier's open enrollment date.
• This will be an additional cost to PEHP.

4. No recession or termination of coverage without prior notice, with the exception for intentional misrepresentation or fraud.

• Does not apply to PEHP.

After 1/1/2011

1. Underwriting conditions - 85% threshold required for large employers (employers of 50 or more employees).

• If a plan falls below the threshold in a year, the plan shall refund premiums to employees on a pro-rated basis.
• This should not affect PEHP, as PEHP is a self-funded plan, always within 90% threshold.

After 3/23/2012

1. PEHP will be required to provide uniform summary plan description.

• Content and format required by statue.
• Must provide notice no later than 60 days notice to a change in plan.
• PEHP is not affected.

After 1/1/2014

1. No waiting period larger than 90 days, for every one of all ages.

• This will be an additional cost to PEHP.

2. No pre-existing exclusion may be applied to all, at any age.

• This will be an additional cost to PEHP.

3. Essential benefits can no longer have lifetime limits, only reasonable annul limits.

• PEHP is trying to keep costs neutral.

4. Dependent coverage required up to age 26, even if they are eligible for another insurance plan.

• This will be an additional cost to PEHP.

Government Plan Issue - Effective Immediately

Health Insurance plans for government employees can choose to be exempt from four federal health care regulations, including the Mental Health Parity Act, Women's Cancer Right's Act, the Newborn Act and Michelle's Law. Currently PEHP complies with all of these federal laws with the exception of the Mental Health Parity Act. Amendments made to this part of the federal health care reform bills do not clarify if government plans will have to comply with all four of these specific health care regulations. PEHP is waiting for an answer as they are currently unsure whether or not they will have to comply with the Mental Health Parity Act. If so, this would be an additional cost to PEHP.

UPEA's Work Brings Results

Changes have recently been announced by the Department of Human Resource Management this week. The changes will be reflected in the next Utah State Bulletin (7/1/2010) and will go into effect in August. Many of the modifications were made as a result of the hearing that UPEA requested.

The substantive rule amendments that UPEA influenced include:
R477-1-1
(50) Highly Sensitive Position: A position approved by DHRM that includes the performance of:
(a) safety sensitive functions:
(i) requiring an employee to operate a commercial motor vehicle under 49 CFR 383 (January 18, 2006);
(ii) directly related to law enforcement;
(iii) involving direct access or having control over direct access to controlled substances;
(iv) directly impacting the safety or welfare of the general public;
(v) requiring an employee to carry or have access to firearms; or
(b) data sensitive functions permitting or requiring an employee to access an individual's highly sensitive, personally identifiable, private information, including:
(i) financial assets, liabilities, and account information;
(ii) social security numbers;
(iii) wage information;
(iv) medical history;
(v) public assistance benefits; or
(vi) [household composition; or
(vii) ]driver license

UPEA requested that “household composition” be removed or defined as the term is very vague and could be interpreted in a number of ways.

R477-4-4
(a) All recruitment announcements shall include the following:
(i) Information about the DHRM approved recruitment and selection system; and
(ii) opening and closing dates.
(b) Recruitments for career service positions shall be posted for a minimum of seven calendar days.

UPEA requested that this information be added back into the rule so as to ensure that the hiring process is outlined in rule.

R477-15
It is the State of Utah's policy to provide all employees a working environment that is free from discrimination and harassment based on race, religion, national origin, color, gender, age, disability, or protected activity or class under state and federal law.

UPEA requested that discrimination be added back into the rule as discrimination can occur without harassment. It is important that this is verbalized in the rule.

UPEA was very instrumental in making these positive changes. UPEA is grateful to DHRM for listening to the concerns of our organization and for their ongoing communication with the Association.

Paid Time Off May Replace Leave Programs

Since the legislative session ended in March, UPEA has been hard at work trying to make sure we stay ahead of the curve when it comes to possible legislation affecting public employees. Through UPEA’s contacts and legislators UPEA staff hears of budget, health insurance, and many issues prior to any action being taken up on Capitol Hill. Some discussions come to fruition and others don’t. This year we have heard rumor of another piece of legislation that may affect public employees – PTO.

Over the course of the past decade, several private entities have changed how their annual and sick leave systems work in an effort to streamline their leave programs. Many companies moved to a Paid Time Off (PTO) System that does not differentiate between sick and vacation leave. Employees are given a set number of hours a year that they may use in whatever manner they wish. If they do not get sick, they can use it all as vacation time. However, if they are sick frequently, vacation may not be an option.

Currently, each employee receives a certain number of annual leave hours and sick leave hours, based on their years of service. Annual leave must be scheduled ahead of time and can be used for vacations, personal matters, etc. Sick leave can be used when an individual is ill, needs to go to a doctor’s appointment, or just needs a “mental health” day.

State employees also have a great benefit that they may use upon retirement. An employee may save their pre-2006 sick leave hours to purchase health insurance. Sick leave hours earned after 2006 can be cashed in upon retirement to be placed into a health savings account to use toward medical purchases.


This benefit has been instrumental in helping productivity in the state of Utah, and ensuring that employees use their sick leave wisely.

Would a PTO program take away from this benefit?

At this time, it is not known. However, UPEA is currently concerned about such a program because it may affect current Sick Leave Benefit upon retirement.

Also, if it does not impact current employees, will it be just for new employees? While UPEA is still seeking answers to this question, it is cause for anxiety.

Many studies have indicated that when a company has moved to a PTO-based system, that the leave hours given to employees has dropped, or cannot be carried over from year-to-year. UPEA’s concern is that employees will be negatively impacted by such a move.

UPEA is continually keeping in contact with legislators and other policy-makers that may potentially be close to this issue to ensure employees are protected and maintain the best benefits possible. As more information develops, UPEA will send emails or additional communications to its members.

UPEA is Hard at Work – Protecting your Rights

On June 8th, 2010, UPEA staff and representatives presented at a DHRM Hearing that UPEA requested regarding proposed rule changes that are to go into effect on July 1st.

UPEA shared concerns regarding rule changes including modifications to the recruitment, highly sensitive position, employee development, and discrimination and harassment policies.

UPEA staff insisted that employees are concerned that job positions continue to be recruited through a "competitive" and transparent process as this is a core merit principle.

UPEA and DHRM staff held a healthy discussion on the highly sensitive positions and information regarding "household composition" being added. UPEA requested that this term either be removed or defined as it is vague in nature.

While no changes were made immediately, DHRM staff expressed a willingness to look at and change a few items that were discussed. It will remain to be seen what actually gets some attention.

As an additional note, because of the efforts of UPEA - with regard to the DHRM rule changes, a section was added into the rule that allowed RIF’d employees that were rehired within a year to reinstate their Program I Sick Leave hours rather than having them all go back to Program II Sick Leave. This benefits employees as they will be able to use earned Program I hours upon retirement.

Federal Health Care Reform & Public Employees

Federal Health Care Reform & Public Employees
Friday, May 21, 2010
12:00 – 1:00
Presentation by the Utah Health Policy Project

The Utah Public Employees’ Association hosted an open forum regarding Federal Health Care Reform and invited the Utah Health Policy Project (UHPP) to present.

UPEA invited all members to participate in the May 19th meeting at the UPEA headquarters. Members were particularly interested in how the reform would affect public employees and whether or not the reforms would solve ballooning premiums within PEHP.

HSAs Not the Solution

The UHPP Board of Trustees Chair, and former PEHP Executive Director, Linn Baker, opened his presentation with a discussion about Health Savings Accounts (HSA). He said that state legislators are endorsing the public employee HSA, which is tied to a High Deductible Health Plan, as a primary benefit for state employees.

Baker predicts that healthy people would opt for the HSA over the traditional PEHP plans because healthy people wouldn’t anticipate ever getting sick. However, a mass migration of healthy members to HSAs would leave high risk individuals in traditional plans. The premiums and deductibles for HSAs and traditional plans are both tied to utilization. Therefore, people in the High Deductible Health Plans would be subject to the same increases in medical costs as people in the traditional plans. Overall, HSAs would not solve the problem of rising medical costs.

Reform Should Give Insured Peace of Mind

Federal reform attempts to solve the problem of rising medical costs by placing restrictions on insurance companies, by requiring everyone to be insured, and by providing incentives to businesses that carry insurance for employees. Jessica Kendrick, UHPP Community Engagement Director, introduced attendees to two families that exemplify problems within the current health insurance system. Her examples addressed issues of pre-existing conditions, gaps in coverage and families who are priced out of the health insurance market. Baker linked these problems to the health insurance industry and brokers who serve as go-betweens.

While private plans are paying go-betweens and lobbyists huge sums, the Public Employee Health Plan costs are driven by the larger market—not profits. Public employees should have an interest in the health care reform because current policy decisions will influence future health care costs to public employees.

Also, Baker said the reform should give some peace of mind because insurance companies can no longer set limits on coverage and requires those companies to cover individuals faced with job loss. Lastly, the legislation should result in more transparency for consumers.

Controversial Mandate

Public employees will probably feel the after affects of health reform as a response to changes in the private sector. Baker said that expanding health insurance coverage may cause premiums to increase, but the federal reform addresses this through the controversial mandate that requires everyone to participate in a health insurance plan.

Theoretically, rising premiums would be mitigated by a healthier risk pool that will result from universal coverage. Currently, some people who can afford to insure themselves choose not to pay premiums—and then use emergency care services to the detriment of those who pay premiums.

Those individuals who choose not to insure themselves would be penalized through the tax code.
Utah is one of 18 states prepared to sue the federal government for requiring all individuals to carry health insurance. Baker suggested that the state could use its resources to apply for federal grants that would lower premiums by addressing malpractice claims and fraud.

Cost Critics

Vocal opponents to the federal reform cite costs as an overall point of opposition. Baker suggested that health care costs have increased more than 10% per year with no ceiling. He said the reform’s initial costs fall well below the cost of doing nothing. The Utah Health Policy Projects gives an unequivocal answer to reform critics:

“The economy remains fragile, and getting health care to millions will have a price tag. But we pay a price for doing nothing as well. The question is: which price is higher? We currently spend more than $2 trillion dollars a year on health care. The Patient Protection and Affordable Care Act will make a short-term investment of roughly $100 billion a year to lower costs and provide coverage to almost all the uninsured. This is absolutely necessary in order to get control of the real cost drivers like "fee for service" payment systems that encourage more "treatments" but discourage prevention. Only with reform will small businesses and families begin to see stability in their premium costs. The new legislation will create true competition to get better prices out of insurance companies. It will provide safer care so we don't spend billions extra to treat preventable mistakes like hospital acquired infections.”

The Utah Health Policy Project has resources to help users understand the reform. Baker also recommended the Reform Implementation Station to understand specific scenarios:

http://www.healthpolicyproject.org/NationalReform.html
http://www.healthpolicyproject.org/

The Utah Public Employees’ Association is tracking the issue very closely and will be directly involved with any decisions that affect public employees. We will update members periodically on issues regarding health care.

HB 140 Goes for Guv's Signature

HB 140, Human Resource Management Amendments (Rep. Brad Dee), passed the House for the final vote on Wednesday morning (3/10), was signed by the Senate President and House Speaker Wednesday afternoon, and will be enrolled for the Governor’s signature.

UPEA is appreciative for Rep. Brad Dee’s willingness to work with us in ensuring merit principles were kept intact within the State Personnel Management Act.

HB 140 Substituted in Senate - Sent Back to House

This morning, at approximately 11:15 AM, the Senate debated 1HB 140 (sponsor Rep. Brad Dee). Senator Dan Liljenquist, the senate sponsor of the bill, began the discussion by substituting the bill amending some provisions that UPEA had requested. UPEA lobbied very hard on the bill to ensure that merit principles within the Personnel Management Act were kept in place, including appealable items.   Liljenquist stated that "the bill has been worked on very aggressively by the Utah Public Employees' Association."

The bill passed both the Senate 2nd and 3rd reading calendars with a 20-5 vote. Because the bill was amended, it was sent back to the House for a final vote. It was placed on the House concurrence calendar, and should pass prior to the end of the legislative session.