March 2017 Issue
March 28, 2017

When a health plan goes off the rails

Author: By Matt Smith
Source: NYSUT United

Sean Crall describes the story this way: "It was absolute chaos."

And that might be putting it mildly.

Imagine you have cancer and, with virtually no warning, your insurer prevents you from receiving chemotherapy; or you have diabetes and suddenly they deny you insulin; or you have a child whose long-term medication is no longer covered.

"We're not talking being denied aspirin here," said Crall, president of the East Greenbush Teachers Association, whose members receive medical coverage through a consortium called the Rensselaer Columbia Greene Health Insurance Trust. "In many cases, we're talking life-saving medication."

The trust, which serves 23 school districts comprising members from nearly 40 locals, was created to keep costs down. Last summer, the trust decided to change its pharmacy manager and, as part of that move, changed from an "unrestricted" to "restricted" formulary, which essentially placed stricter limits on the types of generic and brand-name drugs preferred by the plan. The move — which was projected to result in a $7 million savings — was expected to have only a negligible impact on those covered through the consortium.

That's not what happened.

Instead, the change wreaked complete havoc on the lives of thousands of education professionals and their families across a three-county area.

"The trust underestimated the impact" on participants, Crall said. "They figured it would affect 1 to 2 percent. Instead, it affected between 17 to 20 percent."

The East Greenbush TA immediately filed a grievance. Other locals did too, and filed charges with the state Public Employment Relations Board.

"Members were incensed," said Derek Lewis, a NYSUT labor relations specialist in the Capital District Regional Office.

But in a cruel twist of fate, it was determined that most locals did not have language in their contracts to support the grievances. So, they called a meeting of all local leaders who represented members impacted by the trust's move.

Facing litigation by a number of locals, the trust offered to mediate the dispute regionally. That offer led to meetings involving local leaders, district superintendents, trust board members, Civil Service Employees Association and School Administrators Association of New York State representatives and NYSUT labor relations specialists.

The group met several times over a three-month period starting in November, and the meetings uncovered some unsettling findings, including:

  • the trust was charging participants too much in premiums, and
  • members were not being rebated their share of overpayments when excess cash was sent by the pharmacy plan back to districts.

Troy TA President Seth Cohen said the action taken by NYSUT and the local unions exposed the "complete lack of transparency by the trust in how they conducted business before this debacle.

"This is a consortium of 23 school districts, however, there is a select executive board of seven that makes all the decisions," Cohen said. "And then those decisions are not fully shared until the changes happen."

The mediation led to a settlement, under which the trust agreed to give locals increased bargaining leverage. It also agreed to set up a $50,000 fund to compensate members who faced increased prescription costs. To address the artificially high premiums, the trust will grant a "premium holiday" in 2018, if there is a surplus, so parties can share in the savings.

The Troy, Averill Park and East Greenbush districts, meanwhile, will soon leave the trust and move to another consortium that offers more transparency.

"The decision to bring everyone together was critical to making sure that no one was left in the cold," said Lewis. "Without the NYSUT affiliation, and without thinking globally, there would have been a lot of losers."

Cohen agrees.

"This type of issue is a 'poster child' experience for why unions matter," he said.

"Our contract language was weak and vague when it came to challenging what the consortium did, and several of the other, smaller locals had no language in which to challenge at all," Cohen said. "However, as a large collective group, our voice was very strong and convincing. It allowed us to demand meetings and information from the consortium that even the superintendents weren't getting."

Lewis said the lesson learned from this experience makes it incumbent upon locals to assess their contracts, realize where they might be vulnerable and "shore up those holes."

"Moving forward," he said, "we are going to see increased efforts by districts to save money in areas that have never been attacked before."

Crall believes that message has been heard loud and clear. "Locals all over the region have been alerted because of what's happened here," he said. "Language matters."