The ERS Board of Trustees has selected Blue Cross and Blue Shield of Texas, an Operating Division of Health Care Service Corporation, a Mutual Legal Reserve Company, as plan administrator for HealthSelectSM of Texas and Consumer Directed HealthSelect of Texas for a six-year contract with administrative services beginning September 1, 2017.
The health insurance plans cover more than 400,000 participants, including employees and retirees of State of Texas agencies and certain higher education institutions, and their dependents.
BlueCross BlueShield of Texas has served previously as administrator for HealthSelect of Texas. The current contract, which began September 1, 2012, was awarded to UnitedHealthcare.
ERS manages the contract and is responsible for determining eligibility and enrollment for the health plans. Additionally, ERS establishes the plan design, including setting copays, coinsurance and deductibles.
The third-party administrator (TPA) is paid a fee to process claims and manage the provider network. The TPA also manages wellness programs and provides information to members through the HealthSelect website, direct-mail and other channels.
Both HealthSelect plans are self-funded, which means contributions from participants and employers go into a trust fund used to pay claims and share the risk for overall plan costs. But the plan administrator plays an important role in the delivery of services, such as processing claims and maintaining provider networks.
A TPA offers cost savings, allowing the state and participants to take advantage of efficiencies available through a large health insurance company. In recent years, administration has accounted for about 3% of overall HealthSelect costs, compared to an average of about 12% for similar private-sector health plans.
“Our members have earned excellent health insurance coverage and service,” said ERS Board Chair, Craig Hester. “We know this is an important tool for attracting and retaining the best employees.”
“Over the past several months, as part of a rigorous and thorough selection process, ERS staff worked diligently to identify and recommend the administrator that offered the best balance of network access, customer service and cost. We appreciate the time and effort both companies invested to compete for this contract. We reviewed and considered very viable proposals from two extremely well-qualified firms,” Hester said.
A note about benefits:
Health and other insurance benefits for State of Texas employees and retirees are subject to change based on available state funding. The Texas Legislature determines the level of funding for such benefits and has no continuing obligation to provide those benefits beyond each fiscal year.
UnitedHealthcare and its affiliate OptumRx will begin administering the prescription drug programs (PDPs) for HealthSelect Medicare Advantage, KelseyCare Advantage, HealthSelect of Texas and Consumer Directed HealthSelect on January 1, 2017, under separate contracts awarded at the May 2016 board meeting. UnitedHealthcare will administer the PDP for participants enrolled in Medicare, while OptumRx will administer the PDP for non-Medicare participants.