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Questions and Answers about the Rural Subsidy in PEBB
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Article Content
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Q:
| Why does PEBB have a rural subsidy?
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A:
| PEBB has traditionally offered a mix of plans that includes health maintenance organizations (HMOs) like Kaiser Permanente and participating provider organizations (PPOs) like PEBB’s Statewide Plan.
HMOs have low out-of-pocket costs. PPOs have low out-of-pocket costs when members use providers who participate in the plan’s network and higher costs when members use providers outside the network.
More than a decade ago, there was a perception that the PEBB’s PPO networks didn’t include enough providers in rural areas. The Board began the rural subsidy to give members in these areas the lower out-of-pocket cost if they had to go out of the network to access care.
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Q:
| What has changed since the Board began the rural subsidy?
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A:
| PEBB’s Statewide Plan has a robust network in urban and rural areas of the state. Network contracts have become a strong tool to improve quality of care, because they can require providers to report on their efforts to meet quality measures.
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Q:
| How does the rural subsidy affect overall rates?
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A:
| The rural subsidy increased overall costs to PEBB by $3.7 million in 2007 and $5 million in 2009. It increases overall costs because the plan pays claims to out-of-network providers at the higher “in-network” rate whether the providers are in or out of the network. Here’s an example.
PEBB Member A lives in a county with the rural subsidy. PEBB Member B lives in a county without the subsidy. Both receive a service from an out-of-network provider who charges $100 for the service. The plan covers a $90 charge for this service. The provider can bill the member for the balance not covered in the plan.
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For Member A, the plan pays the provider $76.50 (85% of $90). The member pays the provider $13.50 (15% of $90). If the provider bills for the $10 balance, the member pays a total of $23.50.
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For Member B, the plan pays the provider $63 (70% of $90). The member pays the provider $27(30% of $90). If the provider bills for the $10 balance, the member pays a total of $38.
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Q:
| Why will Deschutes and Jackson counties not have the subsidy in 2011?
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A:
| Both these counties include a metropolitan area. PPO networks in these counties for both PEBB and the Oregon Educators Benefit Board (OEBB) include most primary care providers in the counties, even though OEBB does not have a rural subsidy.
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Q:
| Will the Board continue the rural subsidy in other parts of the state?
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A:
| Next year, the Board plans to issue a request for proposals for 2012 medical plans. The Board may consider eliminating the rural subsidy in certain areas at future meetings.
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