Index

Commission Considers Major Changes to Employee Pay Plan | Cash Contributions for Deferred Compensation Program Begin in April | Virginia's History: Timeless Landmarks | Feedback | Consumers Urged to Use Caution When Shopping From Home | DERC Dedicates New Offices | Scholarship Awards, Retirement Rewards Mark a New Millenium for Virginia Credit Union | Stated Briefly | Focus on 2000 - Your Health Benefits

Following months of exhaustive research and planning, members of the Commission on Reform of the Classified Compensation Plan recently considered their recommendations for bringing the Commonwealth's employee pay systems into the modern era.

The Commission on Reform of the Classified Compensation Plan (above) gained valuable input from several key committees, including the Pay Structure Team (right), a sub-committee of the Technical Advisory Committee (TAC). Key objectives were to move the existing plan toward a performance-based system, to introduce modern compensation practices and to highlight the critical importance of communications and training during the new plan's implementation phase and beyond. An important principle that guided the Commission's work from the outset was the focus on seeing that no state employee would lose money during the transition from the old to the new compensation plan. In broad terms, the recommended new compensation plan would:

Taken together - and if approved this spring by the General Assembly and Governor Gilmore - the recommended changes will achieve the most extensive revision of the state employee pay plan to be implemented for the past 40 years. State employees have long been concerned over pay, promotions and the inflexibility of the current pay system. This past year, they shared their concerns through the statewide employee survey and the Governor's subsequent series of regional town hall meetings. During those meetings Governor Gilmore agreed to appoint employees to an Employee Advisory Committee to provide direct input to the Commission's work (for members list, see Commonwealth Currents, Vol. 5, No. 1, March, 1999).

• Abandon the current system of 23 pay grades, with steps, in favor of nine "pay bands" without steps. In general, pay bands would comprise three current salary grades, with 10 percent more of the combined salary grade amounts added to the top of each band. Pay steps would be eliminated. For example, under the proposed plan, current salary grades 6, 7 and 8 would be combined to form "band 3," with a salary range from $19,811 to $39, 622.

• Collapse the existing 1,650 job classifications into approximately 275 job groupings, called "roles." This change would add consistency to the way positions are identified throughout the state. Also, it would establish opportunities for employees to advance more readily in their careers within the following seven broad "occupational families": Administrative Services, Education and Media Services, Engineering and Technology, Health and Human Services, Natural Resources and Applied Science, Public Safety and Trades and Operations.

• Change the existing method used to establish the minimum and maximum compensation of a particular job in order to assign an appropriate pay range. Job evaluation will look at new factors, such as complexity of work, results and accountability.

• Alter the way employee performance is evaluated and rated, replacing the current five-level rating (from "Exceptional" to "Does not Meet") with a three-level rating. The new plan's optional features would allow individual agencies to institute "upward" feedback from employees or rate individual contributions to work teams.

• Introduce a plan that rewards employees for their job performance. By substituting the current across-the-board process for awarding pay raises with a performance-based system, it would be possible for a high-performing employee to earn more than a co-worker with more time in the same position.



• Increase flexibility in pay practices. Agencies would be able to expand rewards and recognition programs, award in-range salary adjustments, review levels of starting pay for new employees and exercise more discretion over promotions, transfers, and position reallocations.



• Place priority emphasis on a comprehensive and ongoing training and communication program for employees and managers about the features and benefits of the new pay plan.
  

Have you put off saving for retirement because you just didn't have the money to set aside? Now that your employer is willing to join you in putting extra money into a qualified plan account on your behalf, there is more reason than ever to consider enrolling in the Commonwealth's Deferred Compensation Plan (DCP). In addition to tax savings already offered by the Plan, individual contributions to an eligible employee's DCP account automatically will trigger a contribution to a qualified plan account by the state. The amount will equal 50 percent of the employee's DCP contribution, up to a maximum of $10 per pay period.

The state's Deferred Compensation Plan allows an enrolled employee to set aside money each pay period for long-term savings. This contribution is deducted from the employee's pay before state and federal income taxes are withheld, thereby reducing the overall amount of taxable income. The contributions are invested among the various DCP investment options, as directed by the employee, and the interest or investment growth of the DCP account also accumulates free from current state and federal income tax. The convenience of payroll deduction, combined with the benefits of tax-deferred savings, makes DCP the ideal way to build a retirement nest egg.

Beginning with the pay period from March 25 through April 9, 2000, any employee contribution to the DCP plan of $20 or more per pay period will generate a $10 cash match contribution from the state for that employee's account. This is the state's maximum cash match amount allowed for fiscal year 1999-2000, regardless of any additional amounts in excess of $20 per paycheck that an employee might choose to contribute. Employees contributing less than $20 per payday will receive an employer cash match of 50 percent of their contribution (The minimum amount that can be contributed to the DCP is $10). The normal maximum employee contribution allowed in a calendar year is 25 percent of compensation or $8,000, whichever is less.

Legislation authorizing the cash match program, which was passed during the 1999 General Assembly, sets a maximum possible match of $50. However, the actual level of the cash match that is established for any budget period is dependent on the funding available in each budgeting cycle.

"DCP participants should bear in mind that this is not a short-term savings plan," noted Virginia Retirement System Director Bill Leighty. VRS oversees the state's DCP. "There are restrictions to making early withdrawals from any IRS Section 457 deferred compensation plan. We advise employees to make sure they are not contributing money they might need for a short-term emergency."

Approximately 20 percent of state employees now participate in the DCP. These employees need to do nothing to receive the state's cash match, since the state's contribution automatically will be deposited to existing employee accounts on a continuing basis. To receive an employer cash match, an employee must have been employed for at least 12 consecutive months and must contribute at least $10 per pay period to the Deferred Compensation Plan. The program is open only to salaried employees.

The experience of other states has shown that enrollment in deferred compensation programs typically soars once a cash match element is added to the plan. "We expect our program to grow rapidly once the cash match is introduced," Leighty said. "We are projecting an eventual participation rate of 60 to 70 percent. We strongly encourage state employees to enroll early to get the full benefit of the program. If they wait too long, they will risk not having their accounts fully activated in time to take advantage of the first available cash match when paychecks are issued on April 14th. Employees should enroll now," he urged.

More information about the Deferred Compensation Program and the new cash match is available from The Copeland Companies, the third-party administrator for the DCP program, at 800-548-2327.

When taking stock of Virginia's overall worth, most would agree that the state's long, rich and colorful history is among her chief assets. As home to Jamestown - the oldest permanent English-speaking settlement in the New World - Virginia always has attracted American history buffs, serious researchers, hobbyists and hordes of tourists. Each year, they visit the state in droves to tap her vast stores of research information, stand in famous sites, witness reenactments of pivotal events, photograph historic landscapes or examine prehistoric archaeological treasures. In Virginia, they can journey through time.

The essential role of local communities in the statewide campaign to preserve Virginia's historic legacy has not been lost on DHR. While the state can register a historic landmark and gently persuade its owner to preserve it for posterity, the state can place no actual restrictions on a private owner's use of, or destruction of, his property, no matter its historic value. Localities in Virginia often have more authority to restrict the use or alteration of registered historic landmarks through locally enacted historic zoning ordinances.

"As localities grow and expand, we work with them to recognize those historic resources in the local environment that will have the effect of maintaining a community's sense of place," he added.

Through the years DHR has been remarkably successful in its relationships with owners of historic properties, with only a very small number of owners choosing to alter or destroy historic properties once they have been officially registered as landmarks. The Virginia Landmarks Register includes an index of places that once were listed in the register but that are no longer included. Of the 30 properties that have been removed from the Register, some were demolished, others were destroyed by fire and still others were so architecturally compromised by remodeling that they no longer retained the original historical features that qualified them as landmarks in the first instance.

"It is important to note that 80 percent of all the buildings in America were built in the last 50 years. This provides a perspective on how important the identification and preservation of historic buildings has become. In light of this, anything built before the Civil War is extraordinarily rare," Loth explained. From the look of things, The Virginia Landmarks Register may, itself, begin to assume rare historical proportions. The current Register is so thick and voluminous, that the current, book-published format is very likely to give way in the fifth edition to a CD-ROM format, Loth suggested. The Register is a work in progress, which continues to grow. Already, new landmarks have been approved too late for inclusion in the fourth edition, which itself contains only about 10 percent of the properties in Virginia that might qualify for landmark registry. DHR maintains a database of buildings, structures and sites covered in the general survey, containing more than 100,000 entries.

Hot off the press - Editor Calder Loth holds the fourth edition of The Virginia Landmarks Register, which he spent the past four years compiling. Loth photographed many of the historic landmarks included in the book.

THIS OLD HOUSE is the Governor's Executive Mansion located on Capitol Square in Richmond, another building that has been registered as a Virginia historic landmark. First occupied in 1813 by Governor James Barbour, the Mansion recently was re-occupied by Governor Gilmore and his family who took temporary lodging elsewhere while a major renovation occurred. Virginia's Executive Mansion is the nation's oldest governor's residence that has been in continuous use. The extensive renovation was completed with little actual compromise of the Mansion's original design features. This masterful restoration by craftsmen, architects and engineers is being featured on Bob Vila's nationally syndicated television series, "Home Again." The 13-part series began airing last month and will continue through early March (consult local listings, or visit the program's internet web site at www.bobvilla.com). "In keeping with the mansion's historic tradition, restoration efforts have retained - and even enhanced - the mansion's architectural sophistication and classic elegance," First Lady Roxane Gilmore said. "I encourage every Virginian to enjoy the mansion's new and restored facilities through Bob's television programs and by visiting the mansion."

FEEDBACK

This is part of a series of articles to inform state employees about the results of Governor Gilmore's statewide employee survey and town hall meetings, as well as to address common questions and concerns. Each article will focus on a specific topic and correspond with the subjects of most concern to the many employees who participated in the Governor's outreach efforts.

COMMUNICATIONS

Communicating with a highly diverse work force that numbers in excess of 145,000 employees working in more than 200 autonomous agencies and thousands of locations statewide is an ambitious undertaking. Yet, each time the need arises to get a message to, or to hear from, all state employees, state government leaders must get the job done. On a smaller but sometimes equally complex scale, a large state agency also tackles the daunting challenge of sharing important information in a consistent and timely way with every agency employee. Just how well do employees think their government efficiently delivers information and responds to employee communications needs?

The good news from employees who provided responses to this question in the statewide employee survey is that they know where to go to find the information required to do their jobs (90 percent); they read most of state government's official newsletters (85 percent); they generally are aware of promotional opportunities (67 percent) and they find most information provided about employee benefits to be easy to understand (68 percent). Those same employees are slightly less confident in the ability of staff meetings to provide information that supports getting the job done (65 percent agree that such meetings are good sources of communications); that it is easy to find answers to personnel questions (61 percent agreed); that the state's communications efforts keep them up-to-date (60 percent agreed they do); or that they generally feel informed about changes that affect them (55 percent felt informed).

Despite these findings, responding employees highlighted areas where state government communications should be improved, reporting that they usually hear about important workplace changes through rumor rather than management communications (64 percent) and that they sometimes doubt the truth about what they are told by managers (62 percent). Most employees felt they do not receive early enough information about important things that happen in the workplace (58 percent). And while a slight majority of employees reported being praised by their supervisors when they do a particularly good job (52 percent), most (59 percent) reported they do not receive enough recognition for the work they do.

Communicating Consistently

When the need arises to communicate important information to every state employee, a variety of methods are used, usually in combination with each other. Among the ways central agencies get the word out to all employees are:

• Placing notices in the Commonwealth Currents.
  
  
• Using "paycheck stuffers," or specia bulletins bundled and distributed with paychecks.



• Imprinting brief messages on employee pay stubs.
  
  
• Creating specialized publications to be mailed to homes, such as the Health Benefits Program's Spotlight newsletters, the Governor's state employee survey or the Virginia Sickness and Disability Program materials.



• Sending broadcast fax transmissions to agency officials, relying on each agency to duplicate and distribute these documents to its employees.
  
  
• Placing notices in the Virginia Retirement System's publication Memo to Members.



• Making announcements in the public media (rarely), such as in the case of state agency closings due to inclement weather.



• Communicating through various electronic systems, such as the Personnel Management Information System, and relying on individual recipient agencies to duplicate and distribute these documents to their employees.



• Disseminating information among groups of employees which meet regularly on a consistent basis and who have responsibility for sharing such information with employees in their agencies.



• Using e-mail to make direct contact with the Governor or members of his Cabinet.

As useful as they are for consistency of information on a periodic basis, these statewide communications vehicles carry only a fraction of the important employment-related information required to meet the ongoing information needs of the state's employees. By far the greater portion of management and employee communication occurs at the agency level. This is especially true in the vital two-way communications that not only get messages to employees, but also receive messages from employees for relay up the management chain. The Commonwealth's Employee Suggestion Program - and similar efforts sponsored by individual agencies - is a prime example of such an "upward" flowing communication channel. And, of course, the most comprehensive and concentrated effort to open upward channels of communication in state government to date was Governor Gilmore's statewide employee survey and series of regional town hall meetings. The survey findings suggest that agencies vary widely in both the methods and the effectiveness of their internal efforts to proactively communicate with employees about important workplace issues. While some do an outstanding job, others, it would appear, pay scant attention to recognizing employee achievements or actively communicating with their employees.

Communicating Well

Depending upon agency size, work force diversity and the existence of regional offices, agency communications programs range from the interpersonal - such as regularly scheduled face-to-face meetings of managers and employees - to the sophisticated use of intranets, local area computer networks, electronic message boards and all things in between.

Contrary to conventional wisdom on the topic, communicating well in a small agency environment can sometimes be just as challenging as it is in a very large state agency. Size, while important for determining the complexity and type of communications media needed to get the job done, is not the overriding factor. Within organizations, there are several common constraints that impede good internal communications: the tendency to think no one outside an agency division is even remotely interested in that division's business or issues, especially if no one else is directly impacted; the "need to know" concept which, when coupled with the idea that "knowledge is power," encourages the hoarding of information unless a compelling reason exists to inform only certain individuals; the "us versus them" notion of management's relationship with rank-and-file employees; and what might be termed "benign neglect," a case where no "turf" issues exist, but the informational needs of employees are little understood and not of much concern.

Those state agencies, large and small, that communicate well use some common elements in their programs. Among them are the encouragement of information sharing by the agency's director; actively engaging all employees in agency-wide initiatives; using informal settings to break down interpersonal communications barriers; hosting periodic agency-wide "update" meetings; using e-mail and local area computer networks to broadcast information (in some cases daily) to all employees; erring on the side of providing more information, rather than less, by adopting the premise that all employees should know everything that is not purposely confidential; instituting effective employee recognition programs - publicizing employee, as well as agency, accomplishments.

Communicating Better

Governor Gilmore has made improving statewide communications with the employee work force a top priority of his administration. He set the tone for open communications early on with his statewide employee survey, town hall meetings and feedback articles on specific topics, such as this one, which have appeared in each issue of Commonwealth Currents published since last year. The Governor's office also endorsed sponsorship of the first annual Human Resource Leadership Conference, led by the Department of Personnel and Training, the Department of Employee Relations Counselors and the Virginia Retirement System. Hundreds of HR officials in state government shared information and updated their knowledge of policy changes and employment issues in the Commonwealth that will affect all state employees. Additionally, the Governor supports the idea of establishing mandatory minimum levels of human resources training for all Commonwealth managers and supervisors. Taken together, these efforts are expected to improve overall employee communications on the statewide level and within every state agency.

Editor's Note: Do you have suggestions or ideas that you believe will improve the effectiveness of communications in state government? If so, please send your comments to Ivan Tolbert, Manager of Employee Communications, Department of Personnel and Training, 101 North 14th Street, Richmond, VA 23219; telephone (804) 225-2181; email address itolbert@dpt.state.va.us

CONSUMERS URGED TO USE CAUTION
WHEN SHOPPING FROM HOME

On the aching heels and worn-out soles of the recent holiday spending binge, many employees who braved the mall crowds, the toy wars, the parking lots, the freight delivery nightmares and the postal glut might be tempted to finally let their shopping guard down. Don't even think about it! So says the Virginia Department of Agriculture and Consumer Services (VDACS), which has launched an all-out effort to remind even the weariest of Virginia consumers to remain alert and vigilant all year-around. The height of this public awareness effort is targeted for February 14 through 20, recently proclaimed "Virginia Consumer Protection Week" by Governor Gilmore.

"Armchair Armor: Shopping Safely From Home" is the theme of the week that will be devoted to highlighting issues and answers related to the growing trend of shopping from home.

Noted Andres Alvarez, Manager of the Office of Consumer Affairs at VDACS, "Many legitimate businesses have set up mechanisms such as on-line shopping, telemarketing, mail-order catalogs, and door-to-door solicitations that increase the convenience and choices of products and services that can be ordered from home. Unfortunately, scam artists often prey on unsuspecting customers through fraudulent or deceptive offers. We hope that our efforts, particularly those during Virginia Consumer Protection Week 2000, will help consumers develop sensible, safe shopping habits and avoid becoming victims themselves."

VDACS has formed a number of partnerships with government agencies and consumer organizations statewide to maximize the reach of the "Armchair Armor" message. More information about Virginia Consumer Protection Week, and answers to questions about safeguarding your purchases and avoiding fraud, are available by contacting Kathi Lee, prevention and education specialist, Office of Consumer Affairs, at (800) 552-9963, ext. 786-1273 or (804) 786-1273

The Virginia Department of Employee Relations Counselors, the state agency which administers the statewide employee grievance procedures and mediates workplace conflicts, recently relocated its Richmond offices to new quarters in the center of downtown. On hand to dedicate the new office space were senior government officials, agency heads and employees of other state agencies. Lieutenant Governor John Hager, Governor Gilmore's Secretary of Administration G. Bryan Slater, and Attorney General Mark L. Earley's Chief Deputy Randolph A. Beales delivered brief congratulatory remarks during DERC's open house and dedication ceremony.

"DERC is not on anyone's side," Slater noted while reminding the crowd of the agency's unique mission. "Not for management and not for employees, DERC exists only to deliver fair and impartial judgment and resolve workplace conflicts. DERC has skillfully implemented a number of recommendations in this area and has achieved a 75 percent success rate on resolving difficult employee/management conflicts." DERC employees have at least one important reason to be content in their new offices: they had significant input in the design. The leased space was an empty shell. Rather than rely solely on contract design services to lay out the new offices, training rooms, and conference quarters, DERC's Director, Neil A.G. McPhie, and Chief Deputy Bill Atkinson involved the entire staff in the effort to configure the space for maximum productivity and program efficiency.

Taking part in the recent dedication ceremony to officially open DERC’s new office suite are, left to right, Lieutenant Governor John Hager; DERC Chief Deputy Director Bill Atkinson; Secretary of Administration G. Bryan Slater; DERC Director Neil A.G. McPhie; DERC Deputy Director Claudia Farr and Chief Deputy Attorney General Randolph A. Beales.

DERC employees have at least one important reason to be content in their new offices: they had significant input in the design. The leased space was an empty shell. Rather than rely solely on contract design services to lay out the new offices, training rooms, and conference quarters, DERC's Director, Neil A.G. McPhie, and Chief Deputy Bill Atkinson involved the entire staff in the effort to configure the space for maximum productivity and program efficiency.

"This is an all-new agency," McPhie assured. "We have taken bold new initiatives and hired new staff to complement our new office space. We are poised to serve the needs of state employees well into the new century. With this move, we have enhanced our technological capacity, our mediation capacity and our training capacity," he added, "all with a view toward putting a focus on the core 'nuts and bolts' programs that will benefit all employees."

State employees and managers are urged to make a note of DERC's new address, at One Capitol Square, 830 East Main Street, Suite 400, Richmond, VA 23219. The agency's telephone numbers and internet web address are unchanged:
888-23-ADVICE, statewide, or in the Richmond area, 804-786-7994;
www.state.va.us/derc/

For the Virginia Credit Union, the year 2000 is shaping up to be a watershed period in the institution's long history, not just because of the Y2K computer challenges which recently faced all banking and financial institutions, but more intimately because Dorothy "Dot" Hall, VACU's leader and nurturer for the past 42 years, has retired and the scholarship founded in her name has entered its 10th academic year of helping members achieve their scholastic goals.

"Virginia Credit Union has helped educate so many children and helped members reach important goals - buying their first home or that new car they always dreamed of. It's been so rewarding," Hall said while reflecting on her December 31, 1999 retirement and the credit union's long list of accomplishments.

Since 1991, many of those children Hall spoke about attended college with the help of a $1,000 Dorothy J. Hall Scholarship award, now given each year to 25 college students who also are members of Virginia Credit Union. VACU membership is open for state employees, state retirees, employees of localities and public school board employees, as well as the immediate family and household members of these employees. To be eligible to compete for scholarships, in addition to being VACU members who joined no later than September 30, 1999, students must be enrolled in a full-time course of college-level undergraduate study for the 2000-2001 academic year, have attained at least a "B" average, have written an essay and exhibited involvement in extra-curricular activities. The application deadline is March 31, and the winners will be announced this spring.

"Our employees share my personal commitment to helping our members and letting them know we care about them. I have so strongly instilled the philosophy of people helping people in the Credit Union's employees, that no matter how much the institution grows, that philosophy will remain intact," Hall assured. And grow it has. In 1957, Hall joined what was then the State Employees' Credit Union as a temporary bookkeeper. It was a small, one-room operation serving 2,000 members. Today, VACU ranks among the top 100 credit unions nationwide, serving more than 124,000 members and managing $600 million in assets. Hall was named general manager in 1972 and VACU president in 1986. Credit Union member and Virginia Department of Transportation retiree J.E. Galloway, Jr., wrote: "Who would have dreamed the Credit Union would grow to where it is today? You [Dot] must take credit for the phenomenal expansion of services now offered. " Predictably for those who know her, the expansion of services, the embrace of technologies to automate member transactions and the impressive addition of bricks and mortar for a new headquarters building and branch offices are not what Hall would count among her most important achievements. "If I am to leave behind any legacy, I hope it is that I have made some of our members more financially comfortable," she said.

Dorothy J. Hall

And the winners are...

• A previous issue of Commonwealth Currents included a contest form for use by state employees who wished to participate in the annual Virginia Department of Agriculture and Consumer Services "Septober" promotion. The promotion was designed to increase statewide consumer awareness of Virginia's Finest products. There were 1,504 contest entries. From those that bore the correct answer to the Virginia's Finest "Septober" quiz, three were randomly selected. The first prize winner, taking home a gift basket of Virginia's Finest products, was Duane Gary in the Manassas office of the Department of Labor and Industry. The second and third place winners, new owners of Virginia Cooks cookbooks, were Orlena Stewart, from the Virginia Department of Motor Vehicles in Stephens City, and Bea Anderson from the Virginia Department of Corrections in Richmond. VDACS reminds us that we needn't win a contest to enjoy Virginia's best agricultural products. We need only look for the Virginia's Finest logo whenever we visit the grocer, anytime throughout the year.

 

ATTENTION! Many employees who noticed the July 3, 2000 pay date printed in the official Payday/Holiday Calendar (Currents, November) have called to verify its accuracy. THE JULY 3, 2000 PAYDATE IS CORRECT According to the Department of Accounts, the precedent setting change "is necessary because the normal July 1 payday falls on a weekend and movement of this payday into June is precluded because of the July 1 changeover to the new fiscal year." PLEASE PLAN ACCORDINGLY

Commonwealth Currents Special Supplement
Focus on 2000
Your Health Benefits

The Department of Personnel and Training (DPT) has announced its intent to award contracts to six health insurance companies for the provision of medical/surgical health benefits that will become effective on July 1.

Included are Aetna U.S. Healthcare; CIGNA HealthCare of Virginia, Inc.; Kaiser Permanente; Mid Atlantic Medical Services, Inc. (MAMSI); Piedmont Community HealthCare, Inc.; and Trigon Blue Cross Blue Shield of Richmond.

The Key Advantage and Cost Alliance self-funded, statewide plans will be administered by Trigon, the current third-party administrator. Aetna will provide a self-insured, point-of-service (POS) plan and a separate health maintenance organization (HMO). These plans will provide coverage in much of the Commonwealth. The MAMSI POS plan will offer a high-and a low-level of benefits, providing coverage for most Virginia cities and counties. HMOs will be offered by CIGNA, for Central and Eastern Virginia; Kaiser, serving Northern Virginia, Washington, D.C. and parts of Maryland; and Piedmont, serving Western Virginia.

Beginning July 1, members of Key Advantage and Cost Alliance will have approximately the same covered services as they now have under each separate plan. The other five companies will offer the covered services provided under each of their individual POS or HMO plans.

Detailed plan and monthly rate information will be mailed to employee homes in March. Additional materials will be posted on the Department of Personnel and Training's web site, under health benefits. If you do not have internet access at work or at home, contact your local library or community college for assistance. Check the DPT web site periodically for health benefits updates at www.dpt.state.va.us/hbenefit.htm

In making its selections for contract awards, DPT carefully evaluated all proposals and held face-to-face negotiations with the companies. Six criteria were used in DPT's analysis, including the benefits offered, administrative and benefits cost, member services, current member satisfaction, provider network services and participation of small, women-owned and minority-owned businesses.

During last year's town hall meetings with state employees, no one listened more intently to employee calls for more choice in their selection of health care plans than Governor Gilmore. Since that time the Governor's Administration has worked toward that end. If all goes according to plan, those employees' wishes will be realized on July 1.

Just how widespread will the choices be? Your options will likely include alternatives in the delivery of health care, claims processing, medical care criteria, high- and low-level of benefits, provider networks, premiums, deductibles and co-payments. It is almost certain that health care plans which cover the entire state, part of the state, or only several counties, with different structures, will be offered. Types of plans will most likely include Point-of-Service Preferred Provider Organizations, an Exclusive Provider Organization and two different kinds of Health Maintenance Organizations. To assist them in the selection process, employees will have access to a "report card" from each health plan.

The following examples may help put into perspective the kinds of choices employees will have in determining the health plan which best meets their individual and family needs. One scenario considers high- and low-benefit options. The second one presents the employee's share of premiums.

The Department of Personnel and Training has awarded contracts, which take effect on July 1, for the provision of dental administrative claims services, prescription drug coverage and mental illness and substance abuse services (MISA) for Commonwealth of Virginia employees.

Trigon Blue Cross Blue Shield of Richmond, the current third-party administrator, received the administrative services contracts for prescription drugs and dental claims. The MISA contract, which includes the Employee Assistance Program, was awarded to the current administrator, Magellan Behavioral Health of Columbia, Md. Dental, prescription drug and MISA benefits will be incorporated with the Commonwealth's statewide self-funded plans.

In awarding the contracts, DPT based its selections on the careful evaluation of all proposals and the outcome of face-to-face negotiations with the two finalists in each category. Criteria for the analysis of proposals included organization and financial stability, administrative capability, benefit cost management, risk sharing, qualifications of staff, network service, administrative cost and participation of small, women-owned and minority-owned businesses.

The following charts offer a partial financial glimpse of the self-funded health benefits plans for active employees and early retirees (retirees not eligible for Medicare) during the period from July 1, 1998 to June 30, 1999. Data contained in these charts reflect the combined operations of Key Advantage and Cost Alliance.

A true perspective of this period can only be gained through reading a copy of the entire Annual Report for fiscal 1999, posted on the DPT web site.

Premiums represented more than 98 percent of the health benefit program's income for fiscal 1999. In 1996, the average yearly premium per employee was $3,347. By 1999, the average premium was $4,237, an increase of almost 27 percent in three years. The average annual premiums shown here cover the costs for medical, dental, outpatient drug, and mental health/substance abuse coverage.

On average, across all classes of membership, the state pays about 80 percent of the premiums. Holding down the cost of outpatient prescription drugs has presented a difficult challenge for the health benefits program. Prescription drug costs are rising more quickly than other medical costs. Drug expense per employee has risen from $423 in 1995 to $721 in 1999. Use of the mail service pharmacy saves money for both the state and the employees. The Governor's budget contains a recommendation for a study of ways to control prescription drug costs.

The State Health Benefits Program has a specific appeals procedure for employees in the self-funded plans (Key Advantage and Cost Alliance) who experience final, adverse decisions from their health plan. For example, if an employee's medical claim is denied, the employee may appeal the denial, and the plan will issue a final decision. Then, and only then, can the Department of Personnel and Training's level of appeal be exercised.

Administrative Review

You must have exhausted all appeals offered by your health plan before appealing to the Director of DPT, and you must file the appeal in writing within 60 days of the final, adverse decision by your health plan. Appeals on non-claim matters, such as eligibility, may be made to the Director of DPT without going through any plan appeals process. Beginning February 1, appeals can be submitted to DPT via e-mail, at Appeals@dpt.state.va.us

In the appeals process, an informal fact-finding consultation will be offered by the Director of DPT. A decision will be rendered within 90 days of the submission of final information pertaining to the appeal. Once the decision is made, it becomes an "agency case decision." If the claim remains denied, the employee will be notified that, if desired, he or she may exercise the appeals process under the Administrative Process Act.

If the DPT Director denies an appeal, specific written reasons will be given, including specific references to law, regulation, contract provisions or relevant policies which formed the basis for the denial.

If you are enrolled in an HMO plan, you may appeal claims decisions to the State Corporation Commission (but you may not appeal to DPT) after you have exhausted internal appeals with your health plan. Appeals on eligibility may be filed with DPT.

External Review

Another provision passed by the General Assembly during the 1999 session, and signed into law by the Governor, concerns independent, external review of denied claims. DPT is in the process of securing these services from private organizations.

Once the independent review organization is in place, while your medical claim denial from your health plan is under administrative review at DPT, it also will be reviewed by an impartial health organization. This may be a medical peer review organization or an independent utilization review company. It will be the responsibility of the external review organization to confidentially examine the final denial of plan claims to determine whether the decision is objective, clinically valid and compatible with established principles of health care.

Once the independent organization has made a decision, it will provide written notification to DPT. The notice will contain findings of fact on important issues in the case and the basis for those findings. The organization's decision will be final and binding if it is determined to be consistent with law and policy.

Significantly higher prescription drug costs are clearly a national problem, not just a dilemma for the Commonwealth. The aging population, the growing trend among drug manufacturers to market their products directly to the public, and increased demand for specific drugs are among the major factors fueling cost increases. For 2000, the consulting firm Hewitt Associates projects that for employers nationwide, the aging of the population and an 18 percent-a-year rise in prescription drug spending will drive an 8-to-10 percent increase in health care costs overall.

How has the Commonwealth responded to the challenge of higher prescription drug costs? The State Health Benefits Program and state employees save money on prescription drugs through the mandatory generic drug program and using the mail service pharmacy. Other steps taken by the program to reduce costs include negotiating very deep discounts in average wholesale prices, and in dispensing fees, at both retail pharmacies and the Virginia-based mail service pharmacy.

The Governor's budget contains a recommendation for a study of ways to control prescription drug costs. Pending approval by the General Assembly, the study would be conducted by the Secretary of Finance, the Secretary of Health and Human Resources and the Secretary of Administration. A report would be submitted to the Governor and the General Assembly in October 2000.

What You Should Already Know About Your Health Plan

Once you are eligible to enroll in a health plan offered by the State Health Benefits Program, the burden is on you to know what rules apply and what responsibilities are incumbent upon you. While the following may be basic information for veteran employees of the Commonwealth, it bears repeating for those who are new state employees.

o First, it's up to you to choose a health plan based on an assessment of your family's needs. Currently, the State Health Benefits Program offers two, self-funded statewide plans (Key Advantage and Cost Alliance). Depending on where you live, you have a choice of HMOs (HealthKeepers, Sentara, Kaiser Permanente, Piedmont Community or QualChoice One). Your responsibility is to read the plan information and choose a plan.

o You must select plan membership. In other words, what family members will you cover? Will you cover just yourself, or will your spouse and dependent children be included? You are responsible for your choices. If you do not cover a family member who needs care, the employee benefits plan will not pay for that care. If you keep an ineligible person on your membership, your premium payments generally will not be refunded to you, and you may be subject to suspension from the plan.

o In addition, it's up to you to know, or find out, the rules about who is eligible for coverage, how you receive benefits and how to pay your health premiums before taxes (known as premium conversion). Read your plan materials and other information provided by the Health Benefits Program! If you have questions:

o Read your plan materials.

o Check for information on the DPT web site at www.dpt.state.va.us/hbenefit.htm and download any materials you need. o Call KATY, at 1-800-539-7675, to order materials. o Contact your individual health plan.

A new benefit available to state employees this spring will be long-term care insurance. Long-term care refers to the type of services an individual needs when he or she has an incapacitating illness or injury which renders him or her incapable of performing certain routine activities of daily living. An employee focus group worked with DPT to evaluate long-term care proposals and develop specifications for a plan.

While there may be differences in design, most long-term care insurance plans are similar in concept. First, eligibility usually is not limited to immediate family members, such as a spouse or children. In some plans, parents and even parents-in-law, are eligible. A waiting period of up to 100 days is typically included before benefits are provided. Most plans also incorporate a lifetime maximum benefit. In addition, before receiving benefits a plan participant must be unable to perform for 90 days two activities of daily living (such as bathing, dressing, eating, getting in or out of bed) or have a severe cognitive impairment.

The Commonwealth is considering a voluntary long-term care insurance program. Employees would pay all premiums, although the Department of Personnel and Training would administer the plan. Depending on individual circumstances, the premium may be tax- deductible as a medical expense, although this will not usually be the case. Employees and their spouses would be guaranteed issuance of a policy. Provisions would include guaranteed plan renewal for all plan participants and the ability to take the plan with you if you terminate employment. In the weeks ahead, the Health Benefits Program will provide more detailed information about this new benefit.

Why has the long-term care issue suddenly come to the forefront? Not only is the population getting older, but an increasing number of women, the traditional family caregivers, are joining the work force. Families are smaller today, and more geographically mobile, which means that providing care can be much more difficult than it once was. Note these recent statistics from the national Centers for Disease Control (CDC):

+ If you will be over age 65 in about the year 2030, you'll be in good company. One out of five Americans will be in that age bracket.

+ Over the past 50 years, life expectancy has increased. Based on current mortality rates, a person 65 years old in 1997 could on average expect to live until nearly age 83. In 1950, a person 65 years old had an average life expectancy of 79 years.

+ A significant and long-term decline in heart disease mortality rates is one major factor contributing to longer life expectancy.

+ In 1995, nearly 10 percent of non-institutionalized individuals 70 years of age and older were unable to perform one or more activities of daily living (see accompanying article). With age, this statistic increases to nearly 22 percent among individuals 85 years of age and older.

These statistics were published in the CDC's National Center for Health Statistic's "Health, United States, 1999" annual "report card." For more information, see the CDC web site on the internet, at www.cdc.gov

DPT continues to explore the possibility of establishing a health insurance plan for part-time employees. Three companies submitted proposals in response to a request for proposals published last fall. However, those plans were found to be unacceptable. Other options are under consideration. Approximately 12,000 part-time employees, including part-time faculty members, would qualify for health insurance. Also eligible would be adjunct faculty who have taught one semester, or two quarters.

It has been difficult to gain the interest of health insurance carriers to provide coverage for part-time employees. In general, the companies' concerns are two-fold. They do not want to assume risk for what may be a small percentage of the part-time group. In addition, the carriers are concerned that their risk may be greater because many of the employees who do sign up may have existing health problems.

If a health insurance plan for part-time employees does take effect next spring, anyone interested would need to meet the following eligibility criteria:

• be continuously employed for at least six months and

• work an average of at least 20 hours per week.

Employees would pay all premiums.

Special enrollment would occur during the sixth month of employment. Coverage would take effect the first day of the first month after the required six-month continuous employment period. If the employee did not sign up during that month, he or she could not later join the plan. However, if an employee covered under the plan experienced a break in coverage of two months or less, he or she could remain in the plan, provided that the employee pre-pays premiums to the employing agency.

More information will be available soon regarding whether or not a plan will be provided and, if so, what form it will take.

The Primary Care Physician (PCP) you select for your health plan has primary responsibility for managing your health care. However, there may be times when your doctor recommends medical services from a specialist. If you are a member of Key Advantage or Cost Alliance, remember to have your PCP contact Trigon to authorize the specialist's services with a referral. If the referral is authorized, you should receive a letter of authorization within seven calendar days. If it does not arrive, call Trigon Member Services, at (804) 355-8506 in Richmond, or 1-800-552-2682 from outside the Richmond area.

If you receive care from a specialist without a referral from your PCP, in addition to the usual co-payment or coinsurance amount, the following conditions apply:

Key Advantage members must pay . . .

• 25 percent of the allowable charge; and

• Any amount above the allowable charge if the specialist is not in the network.

Cost Alliance members must pay . . .

• All medical charges.

In either plan, if you receive emergency care in a life-threatening medical situation, you will not be penalized. However, the following rules apply:

• You must meet the criteria for emergency care; and

• You will be required to pay any amounts above the allowable charge for care in a facility and/or from a doctor who is not in the network.

Remember to:

o Review your KATY confirmation letter (did you receive it?)

o Look carefully at your confirmation letter from Fringe Benefits (FBMC)

o Verify what's deducted on your first 2000 paycheck

Do you need more information about your health care plan? Are you looking for an Enrollment/Waiver form? Do you want to compare the current monthly rates for health plans offered in the State Health Benefits Program?

The answers are as easy as finding the Department of Personnel and Training's web site, at www.dpt.state.va.us Go to the Health Benefits page to view these and other materials:

It's all there, and more. Just click, view, download and print! You also may want to check for updates to your health benefits information as July1 approaches.

Once July 1 arrives, changes in the health benefits program to incorporate more choice and responsibility also will alter the frame of reference for many state employees. The primary question now concerns what choices will be available to employees in the new plan year (July 1, 2000 - June 30, 2001). But the question will shift on July 1 to a more individual focus - what decisions do I have to make about my health benefits?

When considering your health benefits options, decisions to be made will range from questions to ask and the costs associated with various plans, to whether your current health care provider participates and what the rules are concerning emergency care.

While incomplete, the list below offers a place to start. Consider these areas when looking at health plans for you and your family:

• Types of plans. The choices you will have may include such plans as Preferred Provider Organizations (PPOs), Point of Service (POS) Plans, Exclusive Provider Organizations (EPOs), and Health Maintenance Organizations (HMOs). See the glossary on this page for basic definitions. Plan materials will offer more explanation. You must determine which plan best suits you and your family.
• Network organization. Whether the plan is self-funded, such as Key Advantage or Cost Alliance, or a fully-insured HMO, find out how the network is set up. Check the plan’s provider directory to determine whether your current doctor participates in the plan and whether the hospital you most prefer is included. Must you select a Primary Care Physician (PCP)? What are the special benefits and restrictions? Are there out-of-area benefits and, if so, what are they? Other sources of similar information are the plan’s customer service unit and your doctor.
• Benefits included. Depending on what is important to you and your family, you may prefer a plan that offers special benefits. Examples include preventive services, such as mammograms, prostate screenings and immunizations; vision and dental benefits, and well-baby care. Be sure that you choose a plan that will best provide for the health care needs of your entire family.
• Cost. Remember that, in addition to payment of a monthly premium, you also may be responsible for co-payments, coinsurance and deductibles. These costs vary among plans.
• Handling of emergency care. What are the plan’s criteria when you must seek emergency room care? Many plans define symptoms such as high fever, vomiting, sprains and broken bones (except for multiple or compound fractures) as urgent care. In most plans, emergency care must treat severe conditions such as heart attack, hemorrhaging, poisoning, or loss of consciousness. Also, most plans require notification of your PCP after emergency treatment.
• How to obtain plan facts and clarification of benefits. Read the plan’s printed materials, access plan web sites on the internet, or contact the plan’s member services unit.
• Other resources. Important health benefits program information can be found in the Spotlight and Commonwealth Currents newsletters, and on the DPT web site, at www.dpt.state.va.us/hbenefit.htm Don’t forget to use KATY,
at 1-800-539-7675, for such things as floating enrollment, qualifying status changes and general information about your health benefits.

Co-payment: A specified dollar amount usually paid at the time health care services are received. In this cost-sharing arrangement, insured individuals pay a flat amount per unit of service or unit of time, while the insurer pays the remainder.

Coinsurance: Cost-sharing arrangement in which insured individuals pay or share part of the health care bill, usually expressed in terms of a fixed percentage (for example, 75 percent paid by the insurer, 25 percent by the insured).

Deductible: A specific amount that an insured individual must pay before the insurer’s payments for covered services begin under a health insurance plan.

EPO: Exclusive Provider Organization. A type of preferred provider organization (PPO) which, for reimbursement, requires its members to seek health care services only within its provider network. (Example: Cost Alliance).

HMO: Health Maintenance Organization. A comprehensive health care financing and delivery group that provides, or arranges for the provision of, covered health care services to a specified group of members, at a fixed periodic payment through a panel of providers. (Examples: Sentara and QualChoice).

POS: Point-of-Service Health Plan. While encouraging the use of network physicians or health care professionals, these plans also permit insured individuals to choose providers outside the plan. There is a difference between the reimbursement amount when using in-network services and the corresponding reimbursement amount when services are received from providers outside the network.

PPO: Preferred Provider Organization. A network plan contracted by a third-party payer and “preferred” medical care providers who offer their services at lower-than-usual fees. Care may or may not be managed by a primary care physician (PCP).

POS PPO: Hybrid of a POS and a PPO, usually offering a managed care network, but also allowing members to go out-of-network for medically necessary services. (Example: Key Advantage).

Source: Online Journal of Issues in Nursing, Huntington, Jan. 6, 1997. Copyright 1997 Online Journal of Issues in Nursing.

Advanced technology meets the health benefits program! DPT is evaluating proposals received last fall for an Employee Self-Service System which can be accessed on the internet, as well as an upgraded interactive voice response system similar to the current KATY system.

Under the proposed system, you would be able to view or alter health benefits information yourself, without relying on your agency’s benefits administrator. Included would be such actions as enrollment in a health plan; changes to your address, plan or membership; benefit options and comparisons; accessing provider directories and, perhaps, choosing a primary care physician.

Several options would be provided to identify individual users. The system would use voice print recognition, identifying you by the sound of your voice. Back-ups would include the customary user ID (your social security number or employee identification number) and personal identification number.

More details will be available as work on the system continues. The Employee Self-Service System is scheduled for implementation this spring.

Health Benefits Ombudsman Handles Multiple Roles She will be an advocate who influences policy. Carol Ray has been appointed to serve as the first ombudsman for State Health Benefits programs. During the 1999 session, the General Assembly passed legislation, signed into law by Governor Gilmore, directing the Department of Personnel and Training to appoint an ombudsman who would promote the interests of employees covered under the state health benefits programs. The ombudsman function will be carried out in the newly formed Employee Services section of DPT’s Office of State and Local Health Benefits Programs. Ray begins serving in the new position next month. As Ombudsman, Ray will influence policy, contracts and communications, and she will comment on proposed legislation and changes in the law. She will attempt to balance the individual concerns of employees and retirees with the best interests of the state health benefits group.

Carol Ray

“My priorities are to assure employees’ rights to a thorough and meaningful appeals process, and to promote equity in the administration of the state health benefits programs,” Ray said. “Balance and fairness are essential to the mission of the programs. Additionally, the Employee Services staff will work proactively to remove barriers to communication and employee understanding.” Her section will work with an independent external review organization in appeals involving clinical issues. The staff also will be concerned with analyzing and determining action in such areas as complaints and concerns, suggestions and policy options. Some of its additional responsibilities will include:

• Ensuring that employees and retirees receive timely information on state health plans, assistance in using procedures and processes, and timely responses to inquiries.
• Influencing covered services, deductibles and co-payments, claims policy and health plan customer service standards.
• Communicating employee and program concerns to attorneys, the General Assembly, the Director of DPT and the Secretary of Administration.