SAN ANTONIO, Texas (BP)–The Annuity Board of the Southern Baptist Convention is contracting with Kirke-Van Orsdel of West Des Moines, Iowa, to take over administrative services for its self-funded medical, group dental and long-term disability plans. The current administrative services only (ASO) arrangement with Prudential Insurance Company will be terminated in a three-step process that will be completed at the end of the year.
O.S. Hawkins, Annuity Board president, said, “While this is a change administratively, we believe it will be accomplished with a minimum of inconvenience to our participants and will result in more efficient service. Prudential has worked with the Annuity Board since 1990, and now, by mutual agreement, the two parties have agreed to go our separate ways.”
Life, accidental death and dismemberment, and personal accident coverages are not involved in the change.
Kirke-Van Orsdel, a division of Seabury & Smith, Inc., is more commonly known as KVI. With more than 1,500 employees including its subsidiaries and affiliate companies, KVI is one of America’s largest administrators of health-care benefits. The firm serves more than 7 million participants employed by thousands of corporations and more than 300 association plans similar to the Annuity Board’s programs. KVI processes some 400,000 claims a month. The Annuity Board is expected to add about 32,000 claims per month to the KVI workload.
The Annuity Board offers a protection program that includes medical, life, long-term disability, personal accident and accidental death and dismemberment coverages for employees of churches and agencies, products for trustees and seminary students, and promotes a line of property and casualty products sold by The Guidant Group.
Life and accident plans are insured products underwritten by major carriers. The indemnity medical and dental plans and long-term disability plans are self-funded, currently employing Prudential for administrative services only. Medical coverage is offered through a Personal Security Program for individuals in churches or institutions with fewer than 10 employees, and an Employer Security Program for group coverage is for churches and agencies or institutions with 10 or more employees. A total of 23,440 participants were in the combined indemnity medical plans on June 30, with coverage of another 4,895 in point of service plans and health maintenance organizations. There were 20,085 in long-term disability coverage.
Douglas D. Day, managing director of Insurance Services for the Annuity Board, said the transition to KVI began July 1 when all medical underwriting was moved from Prudential to the new administrator.
“KVI provides an in-house medical underwriting service that will serve our applicants with speed and efficiency,” Day said. “This very important initial customer service will help us deliver a more satisfying experience to our participants.”
On Sept. 1, claims processing for the indemnity medical plans and group dental plans will move from Prudential to KVI. New, temporary identification cards and new claim forms are being mailed to each participant to provide information to service providers. Permanent participant identification cards and new benefit booklets will be issued at a later date.
“The transition will be complete on Jan. 1, 1999, when all our medical and disability plans will be administered by KVI. We look forward to this new relationship and believe the transition will be a smooth one for our participants,” Day said. Claims processing for managed care plans — health maintenance organizations (HMOs), point of service (POS) plans and a dental maintenance organization (DMO) — will continue with Prudential through Dec. 31, 1998. In addition, some “run-out” claims service for Prudential HMO and POS plans will continue through Jun. 30, 1999.
“We hope much of this change will be no problem to our participants,” Day said. “The greatest chance for participant inconvenience is for those enrolled in a managed care plan,” he acknowledged. “There could be instances where a change of physicians will be necessary in 1999.
“However,” Day continued, “KVI has developed and maintains the most comprehensive database of HMO and POS plans in the nation. They are committed to assist us in expansion of opportunities for our participants to enjoy the lower cost of managed care plans.”
Day said the change from Prudential to KVI will not, in itself, result in a change of rates.
“Rates for self-funded plans like ours are ‘claims-driven’,” Day said. “Increasing cost of medical services — especially dramatic increases in the cost of prescription drugs — will require rate increases. But these increases would occur whether the provider of administrative services changed or not. In fact, it appears the change to a new third party administrator at this time will help us control increases,” he said.
“The benefits available under the plan will not change on Sept. 1,” Day emphasized. “Only the place to file claims, and the number to call for preauthorization of treatment, will change. The rerate calculations for Jan. 1, 1999, will be made early in the last quarter of the year, based on our claims experience this year,” Day said.
