Health care provider creates own insurance

Nurse Donna Hartman sees members of the Lilkendey family, Connor, 12, Cindy and Drennen, 14, all of whom were visiting Palmetto Primary Care Physicians’ Urgent Care Center in North Charleston on Tuesday and suffering from the same symptoms. Palmetto Primary Care Physicians is launching its new in-house insurance plan because it said rates through BlueCross BlueShield were too high.

Palmetto Primary Care Physicians will launch a new in-house health insurance plan next month for its employees because BlueCross BlueShield of South Carolina’s rates have become too expensive, the group’s CEO said Tuesday.

The in-house plan will reduce health insurance costs for the practice’s 600 employees by as much as 85 percent per pay period, said spokeswoman Vivian Barajas.

“The savings on my end is over 50 percent,” she said. “It’s kind of like getting a mini-raise for us.”

The new plan will not be offered to patients who visit the practice. It is available only for employees, such as doctors, nurses, physicians assistants and administrators, who work there. Patients covered by BlueCross BlueShield of South Carolina can continue to see their Palmetto Primary Care Physician provider and will not be affected by this change.

“When I came here from out of town, I was sort of stunned at the cost of the health care coverage here for the group,” said Palmetto Primary Care Physicians CEO Jeff Lehrich, who joined the practice this year.

The employer contribution per month was already, on average, $1,200 a month for each employee, he said. The rates for a high-deductible plan were too much for many of the group’s employees to even afford the coverage. Then, BlueCross BlueShield of South Carolina announced it would raise its rates.

“I was like ‘forget this,’ ” Lehrich said. “I’m not going to do this.”

A spokeswoman for BlueCross BlueShield of South Carolina said the company is the most cost-efficient in the state.

“We are unclear how Palmetto Primary Care Physicians will achieve major cost savings in this environment,” Patti Embry-Tautenhan said. “While we are always disappointed when a customer makes another coverage decision, our retention of large group customers remains consistent and is at or above national benchmarks.”

Barajas said the in-house plan covers many of the same benefits that the group’s BlueCross BlueShield plan covered — and at a lower cost.

Wellness and preventive medicine will be covered for free — a requirement under the federal Affordable Care Act. Health care provided by Palmetto Primary Care Physicians will be covered 100 percent too, although a standard co-payment will apply to those services. The co-pay for the patient’s primary care provider will be $25. For a specialist, it will be $50.

The in-house health insurance plan also will cover 90 percent of the cost of services delivered at Trident Health hospitals and 70 percent of the cost of services at East Cooper Medical Center. The physicians group is still negotiating to include Roper St. Francis Healthcare hospitals in the network.

Employees who need to insure only themselves will realize the most savings per pay period, Barajas said. Employees who need to insure their spouses and children will save money each pay period, too, but not as much. The in-house plan is at least 55 percent cheaper than the BlueCross BlueShield of South Carolina equivalent, she said.

Part of the reason insurance rates are increasing can be blamed on the federal Affordable Care Act, which now requires plans to cover many preventive services that were not mandatory before, he said.

But comparing health insurance plans available before and after Jan. 1, when many of the federal law’s reforms go live, is difficult, Lehrich said, because many insurance industry rules are changing.

“It’s apples and oranges,” he said.

The law also allows children to remain on their parent’s plan until they are 26 and prevents insurance companies from denying coverage to customers with pre-existing conditions.

“All those things cost money,” Lehrich said. “I suspect one of the other reasons prices are pretty significantly high here is this lack of competition.”

BlueCross BlueShield of South Carolina, the state’s largest insurance company, dominates the market in South Carolina.

In 2011 the company commanded an estimated 93 percent of the large group health insurance market, 70 percent of the small group market, and 55 percent of the individual market in the state, according to data compiled by the Kaiser Family Foundation.

Frank Knapp, president of the S.C. Small Business Chamber of Commerce, applauded Palmetto Primary Care Physicians for pushing back against a rate hike.

“They’re in a great spot,” Knapp said. “It’s sort of like if you have your own auto mechanic shop. Are you going to send your car to get fixed somewhere else? No, you’re going to do it yourself.”

He said other businesses, particularly small ones, aren’t so lucky. They’ll have to either shoulder the extra burden or drop coverage for their employees.

“The rates are going to go up,” Knapp said, but it’s not fair, he said, to blame the Affordable Care Act completely.

“The detractors of Obamacare are going to blame any type of an increase on Obamacare,” he said. “Look back 15 years. Whose insurance was going down? Nobody’s.”

Lehrich said Palmetto Primary Care Physician’s in-house plan may be available for other businesses in the Lowcountry early next year.

Reach Lauren Sausser at 937-5598.