Judge refuses to halt state health contract

Print Friendly and PDF By: Andy Miller Published: Aug 21, 2013

iStock_000023217379LargeA Fulton County judge Wednesday rejected UnitedHealthcare’s request for an injunction to halt the implementation of a lucrative contract for the state employee health plan.

Attorneys for United argued that the Department of Community Health’s award of a State Health Benefit Plan (SHBP) contract to a rival company, Blue Cross and Blue Shield of Georgia, amounted to “state-sponsored bid-rigging.’’

Superior Court Judge Kimberly Adams declined to intervene, accepting the state’s argument that United has not yet exhausted its appeals with Community Health officials as it seeks to overturn the deal.

The multibillion-dollar contract covers medical services for more than 650,000 state employees, schoolteachers, other school personnel, retirees and dependents.

United, which covers most of the policyholders under the current SHBP contract, has mounted a strong attack against Community Health’s actions, saying the department has not produced all relevant documents under the Open Records Act and conducted a “secret’’ bid for a regional contract.

Timing is crucial to both sides in the bitterly contested case. The state aims to start open enrollment for employees Oct. 21.

United’s attorneys argued that the bid process has been contaminated, and that the current setup should be extended until the legal issues have been sorted out.

With WellPoint being Blue Cross’ parent company, the dispute also involves the two largest health insurers in the United States.

Randy Evans of McKenna, Long & Aldridge, representing United, argued that the state created “a secret bid system’’ for a regional insurer in which “only one bidder was invited.’’

He noted that Community Health’s new commissioner, Clyde Reese,  has declared that the process to hire a metro Atlanta insurer for an HMO was “not properly inclusive’’ and has decided to rebid the contract.

Added Bill Jordan of Alston & Bird, also representing United: “This is a mess that was simply rigged from the start.’’

He asserted that the original state “request for approach’’ asked for proposals for three different forms of health plans, but that the state decided to adopt just a PPO/HRA, and that only one insurer, Blue Cross, was asked to bid on the single offering.

“They asked for one thing and contracted for another,’’ Jordan said.

Jordan also said that DCH requested a bid on integrating medical management and health plan administration from only a single bidder — Blue Cross — and told United that it could not submit an integrated proposal.

“They kept changing the rules on us,’’ Jordan said.

Robin Leigh, an assistant attorney general who is representing Community Health, acknowledged the problems in the documents process. Document production took longer than expected, she said, pointing to the budget cuts that have hit the agency.

Leigh, defending the Blue Cross contract, said there are significant savings in it — ‘‘savings that the taxpayers of Georgia deserve and need.’’

United has not yet exhausted its appeals, Leigh added, and she pointed out that the SHBP’s contracting for health insurance is exempt from the main state purchasing law.

Community Health has “lots of flexibility’’ in this contracting process, said Dan Hofmeister of Reed Smith, representing Blue Cross.

Hofmeister added that Blue Cross, like United, did not know about the regional vendor contract, which went to Kaiser Foundation Health Plan of Georgia.

And an attorney representing Kaiser said the nonprofit health plan has itself been tainted by the legal wrangling.

Stan Jones of Nelson Mullins Riley & Scarborough said that earlier this year, Kaiser presented a proposal to DCH that would offer an integrated delivery system for metro Atlanta. When the state contacted Kaiser, Jones said, it did not know the state had reached out to only one vendor. “We didn’t know the bid was secret,’’ he said.

Referring to United’s complaint over losing the bid, Jones said, “I think the grapes are sour.’’

Recently, medical providers have expressed concern that a single statewide insurer for the SHBP could lead to lower payments to them, especially with the level of savings that the state expects.

The Medical Association of Georgia said it believes that awarding the contract to Blue Cross and Blue Shield of Georgia “will negatively impact physicians and patients in Georgia,’’ Donald J. Palmisano Jr, CEO of the organization, said in a statement.

“This contract will allow Blue Cross Blue Shield to be the dominant player in the marketplace, thereby decreasing competition,’’ Palmisano said. “When there is less competition, physician participation will suffer and impact the access to care for patients.”

(The new state employees contract also, for the first time, prohibits coverage for abortion except in cases where the mother’s life is in jeopardy.)

 

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