Beach retirees' benefits connected to location
By RICHARD QUINN, The Virginian-Pilot
© February 10, 2007
Last updated: 11:39 PM
 

Incontinence plagued Penny Bradbury, and she knew why.

Two miscarriages had punished her lower body. Roller-coaster sugar levels caused by Type II diabetes didn't help. Neither did weight packed on over nearly 30 years as a secretary in the Virginia Beach Sheriff's Office.

The symptoms hinted at a bladder problem, so a urologist suggested exploratory surgery. Bradbury agreed, confident her health insurance as a Virginia Beach retiree would cover it.

A few days later, a nurse called to cancel the surgery. "She had called the insurance company to check on me," Bradbury recalled one day last fall. "They were going to bill me as out-of-network."

Bradbury, 64, found out the hard way that her health care coverage doesn't fully extend to Vinton, a suburb of Roanoke that she moved to two summers ago. In fact, Virginia Beach's local network - in which services cost the least - doesn't extend to most of Virginia.

As the city shops for a new health care provider and dickers over how to pay for that care in the future, Virginia Beach employees should know this: Retirees who stray too far from Hampton Roads pay more for medical care.

Under a plan started in 2005, the city has lower rates for in-network doctors than those contracted through a national plan that extends well beyond southeastern Virginia. As with all insurance plans, a third, more expensive, rate is set for doctors outside the network.

The tiered rates get little attention, for now, because only 76 of the Beach's 597 retirees - or 13 percent - live outside the local network. But with aging work forces nationwide, the issue is stepping forward in a hurry. Last month, the Federal Reserve Board chairman said public health care entitlements for future retirees are moving to a crisis level.

"We are going to see a transformation in how benefits are provided to retirees," said Aaron McKethan, senior associate with The Lewin Group, a health care consulting firm in Falls Church. "Ensuring promises made to future retirees is certainly part of the agenda."

Bradbury thought she'd thought of everything.

After years of struggling to pay Hampton Roads rents, she retired to rural Virginia, where she could afford a mortgage. An inheritance from an uncle's death, plus $19,000 a year in pension and Social Security checks, would let her live near her only daughter, an engineer for Roanoke County.

Life was smooth for a month, until a large bulge grew under her right eye. It was an allergic reaction to poison ivy. Bradbury found a doctor in her new hometown, paid the $15 copay and was treated. But the next time the rash struck, the copay spiked to nearly $90. The doctor's office had learned it was outside Bradbury's network.

"It's a big amount of money to me," she said. Yet, if not for the city plan crafted in 2005, Bradbury would be paying even more.

The city created its "Point of Service" plan to soften costs for retirees who leave Hampton Roads. In the days of managed-care plans - which are still available to employees who retired before 2005 - retirees who moved away paid higher costs because they were always out-of-network.

The new system was seen as a compromise, a plan that didn't have national rates that were equal no matter how far one moved, but still gave retirees more affordable health care on the road. The lowest rates are with the roughly 6,000 local doctors who have relationships with Optima Health, the arm of Sentara Healthcare that runs the city's local network.

Sentara then contracts with Private Healthcare Systems, a Massachusetts firm affiliated with nearly 450,000 providers nationally. Retirees who use PHCS doctors pay higher rates than those who use Sentara's. The differences depend on what type of doctors are visited and what procedures performed.

Costs are higher still for out-of-network doctors and services.

Bradbury said city officials told her before she moved that she would have access to the lowest-cost care. When she learned otherwise, "it was like somebody had punched me. I want to be able to have a doctor here that can see me - that I won't pay through the nose to see."

Linda Matkins, benefits coordinator for the city, would not discuss Bradbury's case because of privacy laws, but she said plan information is always available on the Internet. She said her staff routinely meets with retirees to explain the plan's intricacies.

The plan's provider directory includes a map of Optima's local network to show where it covers. In Virginia, it stretches northwest past Richmond and across Chesapeake Bay to the Eastern Shore. It also covers 11 counties in northeastern North Carolina.

The network doesn't extend to Northern Virginia or Charlottesville, and it doesn't cover Roanoke, the largest city west of Hampton Roads.

"The plan is what it is," Matkins said. "Health care is complicated."

Mel Atkins figured that out early.

A retired Virginia Beach firefighter, he knew the city's local network would always have the lowest rates because that's where most workers and retirees live. Atkins knew he couldn't get the least expensive coverage if he moved far, so in 1994, he and his wife bought 2 1/2 acres in Hertford, N.C., an hour-plus ride from Virginia Beach. The couple has lived there since he retired in 2004.

"I knew I had to be in close proximity within Tidewater," said Atkins, 55, a volunteer firefighter in Hertford. "You have to plan right from the start."

Rising costs are an inescapable truth in public health care.

The city says it needs millions of dollars to deal with new government accounting rules that require localities to report future retiree health benefits as a liability on their financial statements. In Virginia Beach, that unfunded liability amounts to $149.1 million. Then there are the city's ever-rising costs of actually providing health care, which have risen $25 million in the past six years.

Last fall, the city tried to defray costs with an increase in retiree premiums. Current and retired workers balked, so the city dropped the idea and formed a task force to study how health benefits are offered, who gets them and whether it can afford to stay with its current plan. A report is expected this spring. Last month, the city issued a request for proposals on a new health care provider for 2008. It is the first time companies have had a shot at the city's health care contract in five years.

"Five years is a long time in the health care field," said Susie Walston, the city's chief of staff. "It will be interesting to see what's proposed."

Walston said Virginia Beach will consider national plans that could offer equal rates for retirees anywhere. But, she noted, the city cares for more than retirees. Its benefits office oversees care for 12,800 city and school employees and 1,200 retirees. Benefits for both groups are provided until age 65, when Medicare becomes available.

"A company might be great if it's national," Walston said. "But if it doesn't have any customers in Virginia, we have to look at that. It's a business decision."

Bradbury, who sometimes drives the four hours back to Hampton Roads to see friends and receive medical care, has learned that lesson all too well.

"As far as I can tell, I don't have insurance," Bradbury said from her living room. "Not here. Go back there and I do. But then I don't have a roof over my head. I should not have to move back to Tidewater to have medical care."

Reach Richard Quinn at (757) 222-5119 or richard.quinn@ pilotonline.com.