Review of medical and prescription drug third-party administrators underway

This is the second in a series of Penn State Today articles exploring the process of crafting the 2018 health care benefits plan design and cost sharing for Penn State.

UNIVERSITY PARK, Pa. — Along with examining the 2018 design of health care plans, the University is in the process of selecting a third-party administrator for medical and prescription drug benefits. Penn State’s current medical and prescription drug benefits administrator is Highmark, and the current contracts for both end Dec.  31.

Third-party administrative contracts include negotiated components of health care benefits — such as more favorable in-network discounts than may currently exist, and possible reduced administrative costs for Penn State — which positively impact the bottom line for both employees and the University.

Overseeing the request for proposals process is a steering committee comprised of faculty and administrative personnel, representing the President’s Health Care Advisory Committee, University Faculty Senate Benefits Committee, and the Joint Committee on Insurance and Benefits, University Staff Advisory Council, Human Resources, Finance and Procurement.

The work of the steering committee was reviewed with the University Faculty Senate at its Jan. 24 meeting. In that meeting, the full Senate endorsed that both the steering committee and senior administration should:

  • Consider new and innovative opportunities for the pricing and delivery of health care.
  • Insist upon a third-party administrator that is able to provide quality health care coverage to all Penn State employees across the Commonwealth, with broad, in-network access to physicians and facilities.
  • Remain committed to the guiding principles outlined in the Principles for the Design of Penn State Health Care Plans Advisory and Consultative report that was endorsed by the Senate and accepted by President Eric Barron in spring 2016.
  • Seek contractual agreements with third-party administrators to specify terms of commitment of no longer than five years in order to retain flexibility in administrative options during a rapidly changing health care environment.

While the advantages of lower costs to employees are obvious, the advantages of lower costs to the University are more indirect.

The money the University saves from negotiating new medical and prescription drug administrative contracts can be applied to other efforts, such as helping to keep tuition costs at a minimum, and for general salary increases for employees.

It is anticipated that the third-party administrator recommendations will be final before the end of the spring semester.

Watch Penn State Today for the third article in this series, which will explain some health care common terms and provide details of the out-of-pocket costs for the PPO Blue plan and PPO Savings plan.

Last Updated March 20, 2017