PPO added to employee
health plan mix

The North Carolina State Health Plan has announced that a new Preferred Provider Organization (PPO) will be available as a choice for state employees, teachers and other eligible members effective Oct. 1.

The plan’s Board of Trustees approved a PPO contract with Blue Cross and Blue Shield of North Carolina to provide the physician and hospital network to the State Health Plan.

PPO plans contract with various physicians, hospitals and other providers to form medical care networks. For the State Health Plan, PPO members will receive services at reduced premiums and out-of-pocket costs when they use in-network providers. They may also use out-of-network providers at a reduced benefit. Physician referrals are not required. Members decide when to visit a specialist and whether to select a provider from in-network or out-of-network.

Open enrollment is scheduled to take place from May 22 to June 30. All employees will need to make an election.

The PPO will have three options and will be offered along with the current Comprehensive Major Medical plan (indemnity plan) during open enrollment. Other features of the State Health Plan’s new PPO include:
• Network availability in all 100 North Carolina counties
• No deductibles or co-insurance for physician visits
• Reduced premiums for dependent coverage
• A new Employee-Spouse tier, in addition to existing tiers

Summaries of the PPO plan options are available on the State Health Plan Web site, www.statehealthplan.state.nc.us/.

By April 15, a benefits calculator will be available on the Web site to help eligible employees compare the indemnity plan and PPO options and calculate cost savings.

While it is unknown exactly how many members will select this new option, State Health Plan officials are projecting approximately $460,000 in taxpayer savings per year for every 1 percent shift of employees from the indemnity plan to the PPO.

“Based on benefit design and cost savings, we hope to see 80 percent of our members move to the more affordable PPO this first year,” said executive administrator George C. Stokes. “We estimate that the PPO will save the taxpayers of North Carolina more than $30 million dollars in the first full year of the plan, in addition to significant health care savings for state employees and their families.”

In a 2005 survey of North and South Carolina employers conducted by Aon Consulting, 86 percent of the employers reported that some form of PPO product was the most popular plan option for their employees due to flexibility and cost efficiencies. Only 1 percent of employers reported that the more expensive indemnity plans, like the current State Health Plan, were the most popular plan choice.

Posted March 17, 2006

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