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UnitedHealth chosen after 2-year review

Last September, Duke replaced BlueCross BlueShield of North Carolina with UnitedHealthcare StudentResources. BCBS of N.C. had provided health insurance to students for 30 years.

The change has led to complaints—mainly from graduate students—about coverage, access to in-network doctors and other issues with the new insurance provider. Patients had been overcharged, misunderstood and limited to options, as investigated in Part one of this series.

But the selection of UHCSR to be the Student Medical Insurance Plan administrator was the result of a rigorous two-year evaluation involving students, administrators and an independent consultant—a process from which UHCSR came out on top.

Dr. Bill Purdy, executive director of Student Health, said the University frequently re-evaluates its insurance policy by sending out a request for proposals about every three years.

The search narrows

In March 2008, the Student Health Insurance Advisory Committee, an organization of administrators, graduate and undergraduate students chaired by Purdy, met with the top three insurance providers—BCBS of N.C., Aetna Student Health and UHCSR—bidding to be Duke’s health plan administrator.

Stephen Beckley, who was hired as an independent broker for the University, worked with SHIAC to devise a scoring system, which looked at 23 criteria, including the cost to students, the quality of customer service and the availability of in-network providers both in Durham and across the country.

Susan Barry, marketing director at UHCSR, said the company sought to address the University’s requests.

“When presented with a requested plan design in the context of a Request for Proposals, we make every effort to duplicate the plan design,” she said.

 And based on the that design, UHCSR won “hands down,” said David Kahler, Duke’s Graduate and Professional Student Council treasurer and a member of SHIAC.

UHCSR was also chosen with the understanding that their coverage would mirror services previously provided by BCBS of N.C., known as the ‘no gain no loss provision,’” said Jean Hanson, administrative director of Duke Student Health. In addition, UHCSR set co-payments for medications and for specialist appointment expenses, instead of charging 20 percent of the cost, as BCBS of N.C. did.

“Under the previous plan, if you get a prescription medicine, you pay your part and the insurance pays their part—the amount of coinsurance depends on the medicine,” Hanson said. “With UHCSR, we’ve instituted co-pays, so if you get a new, generic drug, you pay $10.”

Unlike BCBS of N.C., UHCSR also provided their own customer service—an improvement on the “nightmare” of managing a separate customer service company with BCBS of N.C., Hanson said.

Furthermore, she said UHCSR offers extension of eligibility, a benefit that allows students who have graduated to keep coverage for up to six months after their plan expires.

The majority of SHIAC favored UHCSR, Purdy said. But the decision, he recalled, was not unanimous.

“The committee had differing views—some favored [UHCSR], some didn’t. It was never 30 people standing up saying, ‘I don’t want [BCBS of N.C.],’” he said.

Kahler said SHIAC sought to inform and receive input on the health plan options it was considering from the entire student community, particularly graduate students. But he noted that at an institution the size of Duke, reaching everyone within the University’s confines was difficult. 

Guiding the review

The review was guided by a different consultant than in years past.

Kahler said that for many members of SHIAC, the use of the independent consultant Beckley gave the process more weight. 

Beckley replaced the Chapel Hill-based firm Hill, Chesson & Woody, Duke’s broker of 25 years, in May 2007. HCW had also provided customer service for University students under BCBS of N.C. until that May, when Massachusetts-based Gallagher Koster assumed the role.

HCW said the termination left the company “very distraught.”

“I don’t know what predicated that decision—we weren’t privy to that,” said Todd Hill, an insurance broker for HCW. “We received a letter in the mail terminating our brokerage services for Duke, and that was the last response.” 

Hill said the termination letter, which was sent in May 2007, was especially unexpected, given what he said was the Duke administration’s strong praise for the company just months before.

“Hill, Chesson and Woody is the benchmark, as far as I’m concerned, and any change would have to rise to a dramatically high threshold of service and support,” Hill read to a reporter from an e-mail he said he received in December 2006 from Vice President for Student Affairs Larry Moneta.

Moneta, who is on sabbatical in Croatia for the Fall, could not be reached for comment.

Purdy said HCW was given the opportunity—just as others were—to present a proposal to SHIAC.  

“It was just business,” Purdy said of the termination. “There were other proposals on the table, and we found that the best proposal was one not given by Hill, Chesson and Woody.” 

For now, Hill said HCW—which provides brokerage services for the University of North Carolina at Chapel Hill, North Carolina State University and Appalachian State University—has been “observing from afar.” Those universities all offer health plans underwritten by BCBS of N.C.

“We kind of feel disappointed,” Hill said, adding that the University plan has “clearly” gone in a different direction. “We feel bad that students seem to have poor service, when they didn’t have that in the past.”

Although Purdy said he does not know when the University will send out another Request for Proposals for student health insurance providers, he said “every company will have the same chance to get our business.”

“It’s not like we’re going to have UHCSR for ‘x’ number of years,” he added.

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