[A] key component of Vermont’s new teacher health care plans has hit a major snag less than three months after it began.
Implementation of new Health Reimbursement Account system offered by a for-profit company has gotten a rocky start.
Almost 250 teachers have unpaid claims and the company hired by most school districts to administer reimbursements has abruptly decided to pull out of contracts as of May 31.
The contractor, Future Planning Associates, says the program has become too big of a drain on its primary business, which is focused on retirement planning, and blames teachers for requiring too much assistance in adapting to the new plans.
The teachers union, Vermont-NEA, in turn is blaming a teacher health care pool for forcing all contracts to begin the first of the year instead of phasing them in.
Health Reimbursement Accounts, or HRAs, cover out-of-pocket medical expenses and can be used for a wide range of products and services not offset by insurance.
On the first of this year, the Williston company took on administering Health Reimbursement Accounts for 80 percent of the state’s school districts, marking the first time that every school district in the state offered HRAs and Health Savings Accounts. The action was part of a more complex health care benefit designed to satisfy changes called for by the Affordable Care Act.
Last week, less than three months into the program, school district business managers received letters terminating the agreement.
“We, as a company, have decided to no longer offer administrative services for HRA, HSA and FSA [Flexible Spending Account] plans involving school district and supervisory union personnel,” wrote Erin Hemken, president of Future Planning Associates. The letter notified school district business managers it would end the contract at the end of May.
Business managers say they were shocked and feel betrayed, according to Brenda Fleming, president of the Vermont Association of School Business Officials. She said many districts went with the local company because it had administered other programs for them. “They had been successful partners for years and to have the plug pulled like that, they were dismayed,” Fleming said.
Lauren Kolitch, attorney for Future Planning, said her client had every right to end services because both sides agreed either could terminate the contract with 60 days notice. She said the firm also has gone out of its way to recommended a vendor that can take over the work and told districts it would waive any fees of they choose to switch before May 31. In fact, Kolitch said, about 50 percent of affected districts intend to transition to the suggested vendor.
“Without getting into a blame game, they agreed to take on a large number of school districts to assist the school districts in these new plans administration activities and they have decided it is not what they want to do,” Kolitch said. “It is that simple — they just don’t want to do it,”
Since January, more than 200 school employees have racked up complaints against the company for failing to properly administer their HRAs, according to Vermont-NEA spokesperson Darren Allen.
“Almost 250 have told us horror stories, ranging from not taking diabetes medication because they had to choose between it and paying their rent, to not filling prescriptions for their children and not going to the doctor when they need to,” Allen said.
One other issue faced by school employees was a delay in their receiving debit cards to be used with the HRAs.
“It is really unfortunate that so many contracts settled late in 2017 and many people didn’t have debit cards in hand on Jan. 1,” said Laura Soares, president of the Vermont Education Health Initiative, the pool that insures nearly all of Vermont’s school employees. “Then claims were slow in getting processed and now they [school districts] are going to have to transition to a new vendor.”
On Jan. 1, VEHI switched to four new Blue Cross Blue Shield plans with lower premiums and higher out-of-pocket costs for employees. Over the last year, school boards around the state negotiated contracts to accommodate the changes.
Allen attributes the problems to VEHI’s insistence that every school contract begin Jan. 1. The union, which has one seat on the VEHI board, believes it was drowned out when it recommended a three-month phase in for the new plans.
“They just ignored us,” he said of the VEHI board. “We saw this train coming for almost two years. We wanted this phased in, we didn’t want a drop-dead date, we wanted it integrated smoothly. You can’t just throw thousands of people onto a different insurance plan with different administrators and have it work.”
The union wanted to run the current plans alongside the new, but Blue Cross Blue Shield said that couldn’t happen, according to minutes from a meeting last August.
Soares said the decision was made after extensive research. “It was not feasible to run both the prior health plans and the new health plans simultaneously,” she said, “due to BCBS-VT system limitations, as well as the increased challenges VEHI would face in setting premiums with the parallel approach.”
Part of the problem could have been volume. The number of claims rose significantly for Future Planning Associates, going from 3,000 or 4,000 a week in December to 18,000 a week after the first of the year, according to the VEHI.
Future Planning said it had difficulty processing claims because it had to rely on getting “accurate information in a timely manner” from school employees and insurance carriers,” Kolitch said. The contract is with the school district as the employer, not the teachers and staff or the insurance company, and this made it hard for FPA to do its job, she said.
This was compounded by a large volume of phone calls and emails from teachers because they didn’t understand their benefits, Kolitch said.
School districts had to find and contract with a third-party vendor to administer HRAs. School districts weren’t told who to contract with, but BCBS recommended that districts use Health Equity, a national company.
Health Equity, however, would not customize accounts as had been requested in order to comply with a compromise law that brought an end to last year’s legislative session following a veto by Gov. Phil Scott.
Every school district took a different approach to HRAs, said Nicole Mace, head of the Vermont School Boards Association. Grand Isle, for example, splits it 50-50 with employees. “I think the problem is Future Planning Associates represented to districts it could support that level of customization whereas Health Equity said that it is too complicated for us to administer,” she said.
Kolitch said the fact that each district has a different HRA benefits program complicated matters. She said some teachers didn’t understand their own plan even though Future Planning went to numerous meetings set up by school districts with school staff to explain them.
“The meetings were not heavily attended, with one or more meetings having not one participant attend,” she said. “It appears as though many were not educated in benefit debit card use, participation share in the payment for services (a new concept to many), and claims processes,” she said.
The Vermont Education Health Initiative recognized there was a steep learning curve that comes with moving to vastly new health plans that included new pieces like HRAs and HSAs, Soares said.
Kolitch said she had been told by her client that union representatives had urged school employees not to attend the educational forums.
Allen of Vermont-NEA called the accusation absurd and a deflection. “The bottom line is this chaos was fomented by a decision to move 40,000 people to a brand-new insurance on the exact same day without the infrastructure to handle it.”
Before the contracts began, FPA mailed benefit summaries and set up a website with information. But starting in January, the company received “thousands” of telephone and email questions about the the terms of the plans and how they worked, “issues that were addressed by Future Planning during the participant meetings,” Kolitch said.
Not being able to control the claims process with the insurer compounded the strain, she said. “The combination of a lack of third-party control and the resources required for individual participant education respecting the changes to the benefit structures resulted in Future Planning Associates decision to return to their primary focus of retirement plan design and administration,” she said.
Fleming, head of the Association of School Business Officials, said business managers had spent two years preparing for the insurance change and looking for partners. They met with Future Planning representatives to talk about their capacity and “they promised they would be ready and able to handle the new business. They said they would hire new staff,” she said.
“The problem they are having doesn’t come from the fact that teachers don’t understand,” she said. “They made promises to districts and at the end of the day they didn’t process the claims in a timely way.”
