Bell Atlantic tries to rein in health benefits cost

One on one

October 08, 1990

One on One is a weekly feature offering excerpts of interviews conducted by The Evening Sun with newsworthy business leaders. Don Bezuyen is assistant vice president of managed care networks for Bell Atlantic Corp., parent of the Chesapeake & Potomac Telephone Co. of Md. Bell Atlantic recently announced it had selected The Prudential Insurance Co. of America to set up and manage a preferred provider health care network for its unionized employees. The move was an outgrowth of a settlement reached last year that ended a month-long strike by Bell Atlantic employees.

Describe briefly the health care issues facing Bell Atlantic and the unions during last year's strike.

Prior to bargaining, it was clear to the company that our medical costs were rising at an alarming rate. It was also clear to the union that the costs of medical care were going up and what they saw a number of companies doing in their bargaining with the unions was raising co-pays and deductibles.

What kind of health care plan did Bell Atlantic have before the strike?

A. We had a traditional medical expense plan, which was a point-of-service plan. It was administered by Blue Cross/Blue Shield. People could choose to use participating providers with Blue Cross/Blue Shield or they could chose any other physician they wanted to use.

Now you had mentioned that Bell Atlantic's health care costs were rising. Do you know how much they had increased since Bell Atlantic's inception?

I don't have a number, but our costs over the past five years have been rising in multiples of the Consumer Price Index.

Was the recent agreement to establish a preferred provider health care plan through The Prudential Insurance Co. a compromise between labor and management?

It was agreed at the bargaining table to form a committee of union and management representatives to put together managed care networks. Both parties agreed that managed care networks were a way out of the bargaining dilemma and that it was a promising solution to a problem which both of us agreed was of major proportions.

What was it about that type of arrangement that seemed to be promising?

Managed care networks offered an alternative for the company and the unions to have a system available for its employees or members of quality health care accessible to employees at more reasonable costs than the existing plan.

Do you have any projections on what the cost savings will be with the network plan?

Well, we do have some estimates but they are, they're very difficult to define as you can imagine because we're phasing our networks in over the 1991, ending on the first of the year in 1992, but we don't hope to save a dime. We wish we could, but that's a totally unrealistic objective. What we hope to do is to slow down the rate of growth in our health care expenses.

Q. Is Prudential penalized if they do not achieve that goal?

Prudential and Bell Atlantic do have an agreement whereby if our forecasted expenses are exceeded, they will share the cost of the excess. On the other hand, if the Prudential managed care network's estimated expenses come in below the target, Bell Atlantic will share the "savings" with Prudential.

Can you describe how you went about selecting your preferred provider plan?

It was a joint decision by the committee which was formed as a result of bargaining.

And the committee was comprised of union and management?

A. Yes . . . .

Q. How did they go about their work?

We began first by educating ourselves and having people in the health field educate us about how to build the best managed care networks we could . . . Then we set about the business of defining our own mission and went about the business with the help of a consulting group about how to best write a request for proposal . . . We sent this out to seven insurance companies, whom we thought would be able to serve our needs.

Q. And why did you select Prudential?

A. We picked Prudential because it offered Bell Atlantic and its employees, the union membership, the highest quality network available to us and accessible to our employees. When I say accessible, I mean that it covered the largest proportion of our employees possible. And finally, well, cost was not the major factor in the decision. I would describe the cost that Prudential was quoting was considered to be reasonable by both parties.

Q. Can you describe how the plan will work?

If you live in an area where we have no networks -- and we're estimating 10 to 15 percent of our employees will live outside areas that are covered by networks -- those employees will be able to chose between an HMO (health maintenance organization) which we currently offer or using the traditional medical expense plan which is in place today.

In the Baltimore area, they are going to be covered because Prudential already had a network in this area?

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