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PEBB Operations Subcommittee Meeting Minutes, April 8, 2008
Public Employees’ Benefit Board
Operations Subcommittee
Tuesday, April 8, 2008, 9:30 to 11 a.m. - Minutes
DAS/General Services Bldg/PEBB-OEBB Board Room
1225 Ferry St SE, Salem OR

Call to Order and Approval of Minutes: October 9, 2007
Operations Update
Response to Public Comments from March Board Meeting
Public Comment
Call to Order and Approval of Minutes
Paul McKenna called the meeting to order.
Bret West moved to approve the October 9, 2007 meeting minutes.
Rocky King seconded the motion.
  • Hearing no further discussion, the motion passed unanimously.
Response to Public Comments from March Board Meeting
Bobbie Barott reported that at its March 18 meeting, the Board requested historical information regarding why employees could not opt out of PEBB medical plans if they have Medicare or TRICARE coverage. She explained that in 2002, an “informal” letter from federal Health and Human Services officials indicated that no violation occurs when an IRS Code 125 Cafeteria Plan allows employees entitled to Medicare to have the same cash-out rights as employees. A federal law enacted in 2006 prohibits providing financial or other incentives for TRICARE-eligible employees to not enroll or to terminate enrollment in a health plan that would otherwise be primary to TRICARE. The new law became effective January 1, 2008. PEBB amended OAR 101-200015, effective October 1, 2007, to include the TRICARE prohibition. In March 2008, the Department of Defense posted a proposed rule, and PEBB published a brief article about the new TRICARE coverage and to request that these members enroll in a medical plan. (For 2007 Open Enrollment, PEBB communicated the upcoming change to agency payroll representatives and benefit representatives, included the information regarding the change in the 2008 member handbook, and sent another reminder to agency representatives regarding the March opt-out change.)
Wendy Edwards read the following section from the April 4, 2008 Employee Benefits Institute of America update:
“The TRICARE incentive prohibition applies beginning January 1, 2008 to all employers (except those with fewer than 20 employees). The DoD has previously indicated that the TRICARE incentive prohibition regulation would not consider a Code Section 125 cafeteria plan to be an unlawful incentive so long as all plan participants are treated the same…Although the regulation is only proposed at this point, employers that are subject to the prohibition may want to familiarize themselves with the regulation and its preamble. The prohibition against offering financial or other incentives must be taken seriously – civil penalties of up to $5,000 can be imposed for each violation.”
She explained the staff recommendation for an amnesty program for opt-out members followed by an audit process with the agencies, and additional options for the Board’s consideration.
Rocky King moved to approve the staff recommendation for an amnesty program for op-out members followed by an audit process with the agencies, as follows:
  1. Send a letter and form to the 1,752 employees whose other group coverage the PEBB system does not identify. 
    • Explain PEBB opt-out rules, federal regulations, the Medicare and TRICARE prohibition, and instructions on making midyear changes. 
    • Require these employees to identify and certify the other group coverage that allows them to opt out.
  2. Update PEBB’s system to reflect member responses.
  3. Send to agency payroll and benefit staff a list of members who did not identify   their other group coverage; request that they research their documentation to provide PEBB with the necessary information.
  4. Update PEBB’s benefit management system to reflect agency responses.
  5. Follow up directly with employees identified by agencies as continuing to opt out       against Medicare, TRICARE or coverage that does not meet PEBB’s definition of “other group coverage.”
Additionally, to request a formal Attorney General opinion regarding informal letters relative to Medicare & TRICARE. If allowed, PEBB will amend OAR 101-200015 to allow employees with either Medicare or TRICARE coverage to opt out of PEBB medical coverage.
Bret West seconded the motion.
The Board heard the following public comments toward the issue:
Testimony #1
Sofia Parra testified that she is an employee with the Oregon Department of Revenue and is a TRICARE member. While the TRICARE change was posted in PEBB’s March newsletter, she was disappointed in the lack of communication beyond that. She commented that e-mail and other communications could have taken place in October 2007, during the Open Enrollment period. The federal law states that financial or other incentives cannot be given to a TRICARE member to not enroll in the medical plan. The only financial incentive she receives is a $138 monthly payment. If she were to stop receiving this payment she doesn’t understand why she wouldn’t be allowed to opt out for TRICARE, because her medical costs would increase due to higher co-pays with the PEBB plans. She would also like to enroll in a PEBB FSA due to higher out-of-pocket medical costs with the PEBB plans.
Testimony #2
Dennis Sigrist testified that he is an employee with Oregon Emergency Management. He stated that the intent of the regulation implemented January 1, 2008 was to target states that were specifically providing incentives for TRICARE recipients to opt out of their state medical plans, and does not apply to cafeteria plans. He suggested that the Board evaluate the regulation to ensure that PEBB is facilitating medical delivery for members. For him, the best health care delivery is TRICARE.
  • Hearing no further discussion the motion passed unanimously.
ProvidenceNetwork Issues
Bobbie Barott referred to Opsattach.2 and explained that beginning March 2007, the member received services from out-of-plan (non-referral) providers. The member stated that the providers assured him they participated in “Providence.” Providence Choice paid these claims at the at the out-of-plan level (except a lab claim). The member did not satisfy his out-of-pocket maximums for 2007.
The member grieved only one out-of-plan claim payment for services incurred during December 2007. Providence received the grievance January 29, 2008 and denied it on
January 30, 2008. The member filed a first-level appeal with Providence, and Providence upheld the original determination and denied the appeal.
The member may submit a second-level appeal to the plan. If the plan denies this appeal, the member may submit a third-level appeal, which would receive an out-of-plan review.
In follow-up, PEBB staff will continue to explain the Providence Choice structure and payment levels in member materials (PEBB and plan handbooks) and will find improved methods for member communication. PEBB will also encourage Providence Choice to send additional explanations to members that clarify the difference between Providence Choice plan and Providence insurance plans and that point members to sources that list Providence Choice plan providers.
Other Public Comments
Dennis Sigrist provided additional testimony regarding the TRICARE issue. He stated that to move from TRICARE to PEBB would result in the loss of his current providers, which would be a hardship. He will remain enrolled in TRICARE because he cannot afford to make a change, even temporarily. He is uncertain what will happen if he is a PEBB member and his family is on TRICARE. He stated that he would leave state service in two weeks if the State doesn’t turn this around.
Meeting Adjourned