Division of Administration - Kristy Nichols, Commissioner - State of Louisiana
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November 8, 2012
Contact: Michael DiResto, 225-342-7000

Jefferson Parish School Board unanimously passes resolution in support of OGB centralization of administrative services

BATON ROUGE – At its meeting last night, the Jefferson Parish School Board unanimously passed a resolution in support of the Office of Group Benefits’ proposed centralization of administrative services through a contract with Blue Cross and Blue Shield of Louisiana.

Projected savings over 12 months for the Jefferson Parish School Board and its employees based on the recent 7 percent premium reduction exceed $5.7 million, while annual savings to the Jefferson Parish School Board from the administrative services centralization are projected to be more than $1 million.

The resolution, which passed favorably by a vote of 8-0, reads as follows:

BE IT RESOLVED, that the Jefferson Parish School Board support the State of Louisiana, Division of Administration’s proposal for the Office of Group Benefits to contract with a third party provider to handle the administration of the Jefferson Parish School Board’s program.

The resolution came on the heels of a letter sent Monday to school district superintendents and school board members explaining the positive aspects of the proposed changes.  The text of that letter appears below:

Letter to School Boards from the CEO of OGB

With the proposed change of the Office of Group Benefits utilizing Blue Cross/Blue Shield of Louisiana to provide administrative services for the PPO plan, I wanted to provide you with important information about the opportunities this transition presents for school boards and school district employees alike.

As you know, premiums for all plan members were reduced by 7 percent in July and will remain at these lower levels through 2013.  As a result of this premium reduction, school boards and school system employees will save about $35 million next year, about $25 million of which from the costs school boards pay as a share of the premiums, and about $10 million saved by the employees themselves.

Also, out of the $20 million in annual operational savings that would result from centralizing administrative services, the share of those savings for school boards and employees would be almost $7 million per year.

Of course, Blue Cross has already been providing administrative services for the HMO, the most popular plan that covers 164,765 people, compared to 62,010 people covered by the PPO plan.  Under an administrative services only contract, Blue Cross simply administers the Plans of Benefits established by OGB, including preparing and providing participant materials, processing and paying claims, and issuing explanations of benefits.

While Blue Cross has successfully performed its administrative services of the HMO, we believe that it’s important for school system employees and retirees who are PPO plan members to have the facts concerning additional advantages they could expect in the coming plan year, including:

  • OGB is not being sold.  OGB will maintain control over benefits and premiums, and OGB will continue to perform oversight and quality control over all plans, including the PPO.  And OGB’s reserved fund will continue to be used for its intended purpose of paying claims.
  • There will be no change in benefits.
  • Customer service centers will increase from 7 to 8, with continued timely customer call answering, customer inquiry response, and claims payment.
  • PPO plan members will now gain access to a nationwide healthcare provider network, a benefit HMO members already have.  This means that PPO members, many of whom are retirees, who are traveling or residing outside the state will no longer be subject to more expensive out-of-network costs.  For example, for an out-of-state hospital stay with a total bill of $5,000, the amount paid by the plan member would go from $2,200 out of network, to $400 in-network, while for a $100 physician office visit, the amount paid by the member would go from $51 to $7.
  • In terms of PPO member access to care in state, because the number of providers will increase under Blue Cross’s provider network, there will be no change to the doctor-patient relationship.
  • A physician-by-physician analysis shows that 99.3 percent of primary care physicians and 99.2 percent of specialists available now in the OGB PPO network are also contained in the Blue Cross PPO network.
  • In fact, with Blue Cross, the number of primary care doctors available to PPO members will increase from 4,151 to 4,255.  The number of specialists will increase from 3,365 to 3,849.  The number of hospitals will increase from 127 to 140.  And surgical centers will increase from 80 to 82.
  • PPO members will also now have access to other benefits already available to HMO plan members, including discounts on gym memberships, hearing aids, diet programs and other services.

As you can see, this transition improves access to care and quality of service to PPO plan members, while reducing their out-of-pocket expenses and saving money for school boards.  We hope that you find this information useful, and as always we continue to be honored to assist our valued school system OGB plan members.


Charles Calvi, Jr.
Chief Executive Officer
Office of Group Benefits


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