To: Employees in the PPO Medical Plans who reside in the Bloomington area
Date: Tuesday, October 16, 2012
Subject: Premier Healthcare and the PPO Network

Premier Healthcare has decided to cease participation in Anthem's preferred provider network (PPO), effective October 31, 2012. If Premier Healthcare does not rejoin the Anthem PPO network by that date, then members in the below medical plans will need to seek services from other providers to avoid out-of-network penalties.

PPO Fee Schedule
The Anthem PPO network includes a single fee schedule for physician payments across Indiana; which also applies to Bloomington-area physician groups, such as: IU Health Southern Indiana Physicians, Monroe Hospital Primary Care, and Premier Healthcare. Indiana law requires insurance companies to allow any physician to participate in their PPO network who are credentialed and who accept the associated fee schedule; and the law does not allow insurance companies to discriminate against or among providers. This is called the "Any Willing Provider Law" and it applies to Anthem and other insurance companies doing business in Indiana.

Anthem, like other insurance companies, adjusts their fee schedules on a periodic basis, to reflect changes in market pricing. Anthem's fee schedule for Indiana physicians is generally higher than fee schedules in adjacent states; specifically, higher than Kentucky and Ohio fee schedules.

The Indiana Any Willing Provider Law does allow, and Anthem provides, additional reimbursement to participating physicians when they meet certain quality goals in areas of women and children's health, diabetes management, and heart health. These include goals for services such as mammogram and regular A1c testing for diabetic patients.

Anthem's role for IU's self-funded medical plans is to process claims, provide customer service support, and facilitate contracts with hospitals and physicians for preferential fees. In this capacity, Anthem does not provide insurance or have a financial stake in fees – Indiana University reimburses Anthem for every dollar paid to providers, with three to four million dollars paid each week. Some of these expenses are covered by employee payroll premiums.

Premier Healthcare's Request
Premier Healthcare has requested a substantial increase in fees for their participation in the Anthem PPO network. Premier Healthcare also requested a new, additional monthly payment to each full-time physician. The total increase requested is in excess of 12%.

Concerns with Premier Healthcare's request for fee increases include:

• Healthcare costs are already rising faster than other services and commodities.
• Self-funded employers, like IU, and their employees pay for current expenses and would pay any increased amounts. (At IU, where the University's budget is fixed, employees would pay for the entire increased amount.)
• Anthem's statewide physician fee schedule is already higher than adjacent states.
• If Anthem were to increase Premier Healthcare's fee schedule then the fees paid to IU Health Southern Physicians, Monroe Hospital Primary Care, and other physicians would increase as well.

Impact of Premier Healthcare's Actions
Unless Premier Healthcare rejoins Anthem's PPO network, on November 1, 2012, those physicians will be considered out-of-network providers for the following IU-sponsored medical plans:

• IU PPO $400 Deductible
• IU PPO $900 Deductible
• IU HDHP PPO & HSA

Other physician groups located in the Bloomington-area continue to accept Anthem's PPO network fees schedule, including IU Health Southern Indiana Physicians (http://www.siphysicians.org/, 812-353-3627) and Monroe Hospital Primary Care physicians (http://www.monroehospital.com/services/primary-care).

Anthem's provider contracts include safeguards for continuity of care during a 60-day transition period following the termination of Premier's contract. These include life-threatening emergency care and ongoing care in progress on November 1, including inpatient stays, critical care treatment plans, and pregnancy in the second or third trimester.

Indiana University is hopeful that Premier Healthcare will renew its contract with the Anthem PPO network and accept the same fee schedule as other physicians in Indiana. Whether it is Premier Healthcare or any other provider group, it is unfortunate that network contract negotiations disrupt employee medical plans and Open Enrollment.

The following website includes additional details and a Q & A resource: www.hr.iu.edu/benefits/premier. Updates will be posted to the website as they become available.