Board Approves Changes in Health Plan, Including New Administrator

September 15, 2010

September 15, 2010 — Some University of Virginia employees will see no increase in their health insurance premiums next year, while others will pay about 3 percent more, the University's top human resources official said Tuesday.

Meanwhile, the University will cover 81 percent of the premiums, absorbing a 5 percent increase in its share, Susan Carkeek, vice president and chief human resources officer, told the Board of Visitors' Finance Committee.

Premiums will rise for those enrolled in the U.Va. Health Plan's high-premium option, but will stay the same for those enrolled in the low-premium option.

Also, Southern Health is out and Aetna is in as the plan's administrator.

Carkeek's briefing on changes to the health plan was part of the board's two-day regular meeting. The board backed a $22.9 million plan to repair and renovate the Rotunda and approved a memorial plaque in honor of Morgan Dana Harrington, a Virginia Tech student who was slain last fall after disappearing from the Copeley Road bridge near the U.Va. Grounds.

The board also elected the University's first woman vice rector, who will become rector next July; heard reports on faculty and staff salaries and the activities of the governor's higher education commission; and approved the design of an expansion of Newcomb Hall's dining facilities.

Health Plan Changes Approved

In 1995, U.Va. became the only Virginia state agency to operate its own employee health plan. The plan was initially administered by QualChoice of Virginia, which was a subsidiary of the Blue Ridge Health Alliance – a partnership between U.Va., Martha Jefferson Hospital and the Health Services Foundation. Southern Health Services acquired QualChoice in 2001 and has administered the U.Va. Health Plan since then.

In 2009, University officials decided to issue a request for proposals for administrative services and formed a committee that included employee representatives from both the Academic Division and the Medical Center. The committee received five proposals, heard oral presentations from four, and narrowed the field to two finalists before selecting Aetna.

On Tuesday, the board gave Leonard Sandridge, executive vice president and chief operating officer, the authority to sign a five-year agreement with Aetna, with an option to renew for two additional five-year periods.

Background materials presented to the board's Finance Committee cited the company's low administrative costs and a guarantee of an annual 4 percent reduction in claims costs below those made under Southern Health, resulting in a savings of $3.8 million. Other factors cited included a proven program for managing mental health benefits, Aetna's national and international network of providers and glowing references.

U.Va.'s health plan offers employees two options. Those in the high-premium program – about 90 percent of covered employees – pay larger premiums in exchange for lower out-of-pocket expenses when services are used. Those in the low-premium plan save on premiums, but pay more at the point of service.

In 2009, total claims by those in the high-premium plan shot up 13.3 percent. In response, premiums were increased, while the low-premium rates remained the same. The effort appears to have worked; year-to-date claims have risen by a much more manageable 3.9 percent, Carkeek said.

The University will again hold the line on rates in the low-premium plan in 2011 while those in the high-premium plan will see rate increases of between $2 and $12 per month. 

Employees may change their plan during the annual open enrollment period, which runs Nov. 1 to 19. Under the federal health care law, new employees who do not make a selection will automatically be enrolled in the low-premium plan. The new plan begins Jan. 1.

Carkeek noted that switching from the high-premium plan to the low-premium plan will be like getting a raise; for single employees, the savings amount to $444 per year, while for those paying for family coverage the annual savings would be $3,192.

Other changes to the health plan, also effective Jan. 1, will bring it into compliance with the federal health care reform legislation. Dependent coverage will be extended from age 23 to 26; the $2 million cap on lifetime benefits will be removed; and employees will no longer need prior authorization for mental health services.

The board also approved a new pharmacy administrator, Catalyst Rx.

Rector Urges Action on Faculty, Staff Salaries

Ten years ago, the Board of Visitors set a goal: To keep faculty quality among the front ranks of national institutions, the University ought to boost its faculty salaries to rank between 15th and 19th among the 60 members of the American Association of Universities.

The board embarked on a multi-year plan to meet that goal. From a low ranking of 32nd in 1996-97, the University steadily marched to the brink of its target range. In 2006-07, U.Va. ranked 20th, with average salaries just $600 below its goal.

Then the recession hit. In December 2007, the state mandated a salary freeze that still persists.

In the 2009-10 rankings, U.Va. is 29th, and $7,000 away from the elusive No. 19 ranking that marks the bottom of the target range.

It will be necessary to boost salaries in the near future if the University is to maintain the quality of its faculty, Sandridge warned.

"We have been very fortunate" that the faculty understand the economic circumstances and have remained loyal thus far, he said in presenting the salary report to the Finance Committee.

John O. "Dubby" Wynne, rector of the University, said that as the economy begins to recover, salaries – for both faculty and staff, who also are lagging in the market – should again be a priority.

"We need to address this as soon as possible," he said. "And every time we have a chance to say 'thank you' to faculty and staff, we ought to do so."

Dragas Elected Vice Rector

In July, Helen Dragas will become the first woman rector in University history.

Dragas was elected vice rector Monday, replacing Daniel R. Abramson, whom Gov. Bob McDonnell chose not to re-appoint to a second term on the board. She will serve as vice rector and chair of the board's Finance Committee until rising to rector on July 1.

Dragas, who earned a bachelor's degree from the College of Arts & Sciences in 1984 and a master's in business administration degree from the Darden School of Business in 1988, is the chief executive officer of The Dragas Companies, which trades in residential and commercial property development, property management and mortgage lending. She lives in Virginia Beach with her husband, Lewis Webb III, and their three children, and is also active in several community organizations.

On Tuesday, Dragas said she was honored to be elected by her fellow board members.

"The University is fortunate to have a board made up of extraordinary members, all of whom share a steadfast love of the institution and a deep responsibility to their roles as good stewards," she said. "I am humbled by the confidence they placed in me and will do everything I can to live up to their trust. Together, we will support the extremely capable leadership of our new president, Teresa Sullivan, in advancing the University's eminence as a center of higher learning as it tackles the many difficult issues facing humanity in the commonwealth and around the globe."

Rector Updates Work of Governor's Higher Ed Commission

During the board's preliminary meeting, Wynne offered board members a sketch of the activities of the governor's Commission on Higher Education Reform, Innovation and Investment.

While the commission is still in the midst of its work, it has pursued a wide-ranging agenda, he said. McDonnell has set a goal of granting an additional 100,000 degrees annually, but the commission is still wrestling with the details of what kind of degrees should be awarded, to whom and by whom, though there will likely be an emphasis on science, technology, engineering and mathematics, Wynne said.

There will be an effort to boost graduation rates, though it will not likely affect U.Va. which already boasts a six-year graduation rate of 93 percent.

The commission will likely seek to boost middle-class financial aid. In terms of funding, the commission is seeking to calculate base funding and a funding model, and perhaps identify a dedicated revenue stream. There may be a gain-sharing plan to encourage institutional cost-cutting, he said.

There will likely be efforts in the direction of technical innovations, including online and distance learning. The commission is also examining efficiency measures, including better summer use of facilities and the creation of three-year undergraduate degree programs.

Finally, the commission will seek to expand research programs, Wynne said.

Newcomb Hall Expansion Plan Approved

In June, a proposed design for a new façade on the west side of Newcomb Hall, necessitated by an expansion of the dining facilities, inspired a minor revolt by members of the Buildings and Grounds Committee who described it as austere, "vanilla, institutional-looking," and generally not reflective of the Jeffersonian neo-classical architecture of its Central Grounds neighbors. It was sent back for more work.

On Tuesday, the revised plan won over almost all of the critics and was approved.

Computer renderings of the new design showed an entrance framed by tall sandstone columns and more liberal use of sandstone highlights. The white-painted entranceway and window frames further break up the heavy bricking of the rejected design.

Board Briefs

• The board endorsed a modest package of budget requests to forward to the state Department of Planning and Budget for consideration by the governor's office. Besides the $12.95 million for renovation of the Rotunda, it included $12.3 million over two years for operation and maintenance costs for new buildings in Charlottesville and $1.2 million for new buildings at the College at Wise; and $5.9 million to support start-up costs for new faculty in science, technology, engineering and math fields. It also includes a request to forestall any state attempt to claim non-general fund savings, labeling it "inconsistent with the authority granted in the University's Management Agreement."

• The board approved the design of a new workshop and maintenance facility to be shared by the School of Engineering and Applied Science and Facilities Management. Engineering will use the building's top two levels, accessible from Edgemont Road, primarily for student projects. Facilities Management will occupy the bottom two floors, accessible from its existing shop area. The building, located across from the Slaughter Recreation Center near the Alderman Road student housing area, is expected to cost between $3.5 million and $4.2 million, paid from gifts and operating reserves.

• Boosted by a 15 percent return in the last year, the value of the University's long-term endowment pool has rebounded to $4.45 billion. The endowment had peaked at $5.1 billion in 2008 before the economic downturn took a large bite; the pool's value at the end of the 2008-09 fiscal year dropped to $3.96 billion. The rebound came even while the search for a new leader for the University of Virginia Investment Management Company is ongoing. Wynne told the board's Finance Committee that the field had been narrowed to seven candidates, and he hoped to have a successor named in eight to 10 weeks.

• Steve Flippen, assistant athletics director of compliance, briefed board members on National Collegiate Athletic Association compliance matters, particularly in regard to recruiting, extra benefits and gambling. He urged board members to contact his office with their questions before taking any actions that could jeopardize the University's standing.

— By Dan Heuchert