UHS Director Daly meets with GSS, explains recent healthcare changes

By Brian Comfort

On Tuesday, Dec. 6, University Health Services (UHS) Director Bernette Daly spoke with the Graduate Student Senate at its regular meeting in the Campus Center. In response to the urgings of and an invitation from the GSS leadership, Daly was there to open a dialog with graduate students in light of recent drastic changes to the student health insurance plan (SHIP) and recently announced changes to the operating hours and services available at UHS.

Daly prefaced the open forum by outlining some of the recent changes and the reasoning behind them. She stressed that she felt there are two separate areas of change, one regarding health services and the other regarding health insurance.

Changes to health services include a reduction in operating hours at UHS, the closing of the UHS pharmacy, the elimination of 21.5 UHS positions and the outsourcing of selected lab testing. Daly said a consulting firm, Hodgkins Beckley, recommended these changes to address budget shortfalls in the UHS operating budget and to plan for the eventuality of a new UHS building.

The current building, now 50 years old, was built as a 110-room hospital and thus is laid out in a manner that is not conducive to the building’s current role as an outpatient/clinic facility. She said the building has approximately $5 million in deferred maintenance in addition to $13 million in repairs and upgrades to conform to current code regulations.

“If we do nothing in the next five years to fix that, it will all be gone,” she said. “We won’t be able to function. We will close.”

Daly said two separate facilities reviews have indicated that it will cost approximately $20 million more to renovate and upgrade the current building than to raze it and build a new one at a cost of about $51 million. Because UHS is an auxiliary service, Daly explained, it is expected to cover all of its own costs, meaning none of its budget comes from state funding to the university. Thus, all of its $24 million annual budget and none of the money needed to finance a new building is guaranteed to be covered through state allocations to the university.

The money generated by the mandatory student health fee and payments from insurance companies supply the revenue for the UHS operating budget and any capital improvements it may need. Thus, in order to finance a new building, UHS would need to generate an additional $4.2 million per year to pay the debt on a new building over a 20-year period.

To achieve this, UHS has come up with a plan of increasing revenues and decreasing costs. The cuts to the hours of operation, the elimination of staff positions, the closing of the pharmacy and the outsourcing of certain lab tests will help generate some of the decreased costs. Daly said that the consultants had recommended even steeper cuts in the UHS hours of operations, but that UHS officials successfully lobbied Vice Chancellor Jean Kim to keep UHS open longer and seven days a week.

In order to generate more revenue, UHS renegotiated some of the terms of the Student Health Insurance Plan. In the past, the insurance provider (which has been Aetna in recent years) did not compensate UHS for any medical services provided to SHIP members at UHS. It was only outside insurers like Blue Cross Blue Shield that would compensate UHS for medical services performed at UHS. The mandatory student health fee covered the costs of services provided to SHIP members.

But beginning this summer, SHIP switched to a co-insurance plan with Aetna. For any medical services performed outside of UHS, the 6,000 students covered by SHIP, including roughly 2,500 graduate students, will now have to pay 15 percent of the total costs of that service up to a cumulative cap of $5,000, after which the services will be covered at 100 percent. In return for students shouldering this cost burden, Aetna is now reimbursing UHS for 85 percent of the costs of all services performed at UHS to SHIP members. The mandatory health fee covers the remaining 15 percent and thus visits to UHS are still free for SHIP students.

If Aetna were to have reimbursed UHS for services performed there without the co-insurance, Daly said it would have led to an increase of 30 percent in the plan’s premiums. With the co-insurance, that increase was limited to 17 percent, she said. Daly said she was limited in her bargaining power with Aetna because of the collective bargaining agreement between GEO and the university.

“The GEO contract has some very specific language limiting co-payments,” she said. She added that she does not like co-insurance because it provokes unnecessary anxiety because people are often uncertain as to how much, exactly, their health care is going to cost them, and would have much preferred raising co-payments as these are fixed, predictable payments unlike co-insurance, which will fluctuate according to the cost of the service performed.

This new payment by Aetna to UHS will result in approximately $2.5 million per year in increased revenue. This, coupled with budget reductions, will help UHS come up with the $4.2 million needed to pay for debt service on a new building, Daly said.

One GSS senator asked Daly why these changes have all come to a head now when surely it should have come as no surprise that the UHS building was old and outdated.

“This institution is the least well-supported of any state flagship institution,” Daly said about the funding UMass receives from the Commonwealth.

In the past, “old decisions were made not to do the deferred maintenance,” Daly said. In addition, the UMass Board of Trustees, responding perhaps to perceptions that higher education costs too much, are reluctant to raise fees like the mandatory student health fee. It is unclear at this point, Daly said, exactly how much the university might contribute to the construction of a new building.

A public health student voiced some concerns that with some of the lab work being outsourced and thus resulting in increased costs to students, some students might be reluctant to get preventive tests like screenings for chlamydia that used to be free. “This is healthcare moving backwards not forwards,” the student said. “We should be promoting free screenings.”

Daly said that UHS will monitor these types of concerns.

Concerns were also aired about the disproportionate burden that women SHIP members will have to shoulder because there is no OB/Gyn doctor at UHS. Daly said that routine gynecological care is available at UHS, just not from an OB/Gyn specialist. “We do a lot of women’s health at UHS,” she said. Though she did concede that mammograms, which are considered routine health care for women of a certain age, are subject to the 15 percent co-insurance fee as UHS does not provide them in-house.

Recently, nearly 30 graduate program directors sent letters of concern to Daly regarding their ability to attract quality graduate students to UMass if healthcare insurance continues to get more expensive and the services are continually reduced. One student mentioned that many grad students have been willing to overlook the fact that grad students here get paid on average less than they do at peer universities in large part because the healthcare benefits have been historically above average.

“That’s why the Vice Chancellor and I are meeting with GPDs,” Daly said.

A potential solution to the continually rising costs is moving to a self-funded model of insurance. In this scenario, UMass collects and holds all the healthcare insurance premiums. A company like Aetna would be contracted to process claims, but the money would stay in house. This would allow UMass to gain investment income from this pool of money and also to cut out the insurance company’s profits and the fees it charges, but it also means the university is at risk of being overextended if too many claims for too much money pour in because of a natural disaster or some other unexpected occurrence.

“Looking at a partial self-funding model,” Daly said, “we will retain the money here on campus and just pay as claims come in. We hold the premium money so that we can get investment income and those types of things.”

Responding to a request from the GSS in October, the administration has agreed to have one graduate student and one undergrad on the steering committee involved with negotiations with insurance companies for next year’s SHIP.



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