Mixing a multibillion-dollar health contract with fierce industry protests and abortion politics is a sure recipe for turmoil.
The new State Health Benefit Plan contract tops the charts on turbulence. It could also produce a significant realignment of the state’s health care landscape.
The Department of Community Health revealed Thursday at an agency board meeting that Blue Cross and Blue Shield of Georgia will be confirmed as the winner of two major contracts in the State Health Benefit Plan (SHBP), which covers more than 650,000 state employees, teachers, other school personnel, retirees and dependents.
UnitedHealthcare, which protested the initial notice to award the bid to Blue Cross, is expected to continue to fight that decision in the courts.
The agency board Thursday approved a benefit design that eliminates abortion coverage except in the case of the mother’s life being in jeopardy. The abortion restriction surfaced as a surprise benefit change this week.
The new benefit plan will also reduce premiums for many state employees and teachers, state officials said.
The Community Health board approved the new benefit plan design and rates in an unusually contested 5-3 vote, with one abstention.
The abortion restriction did not draw any board discussion. But board member Jamie Pennington protested that some SHBP members in one area of the state could have a choice of insurers, while those in other regions won’t have a selection of plans.
Community Health Commissioner Clyde Reese, though, noted that savings from the new contract would put the health plan on more solid financial footing. “It will allow our members to have reduced premiums for the first time in quite a while,’’ he added.
State employees, Reese noted, have been seeing a “double whammy’’ with higher premiums and no raises for years.
“We think choice exists, but others may differ,’’ he said.
Blue Cross will win the third-party administrator and medical management parts of the contract. Express Scripts will get the pharmacy benefits management piece, and the wellness contract will go to Healthways.
Trudie Nacin, chief of the SHBP, said Thursday that the plan has a balance of about $220 million, or just 16 days of claims expenses. But the new contract, she said, could produce up to $200 million in savings a year.
Employees will get the option of a Gold, a Silver or a Bronze plan, similar to those offerings in the upcoming health insurance exchange, Nacin told the agency board. All options currently approved would provide a PPO plan, with a health reimbursement account attached.
Employees picking a Bronze plan will reduce their premiums, Nacin said. Many people picking a Silver plan will also see their premiums fall, Nacin said, while those choosing Gold will have an increase in their rates.
Members and their spouses will also have a wellness incentive of up to $480 a year.
“Any time the premiums are lower, it will make people happy,’’ said Tim Callahan of the Professional Association of Georgia Educators, which has 84,000 members. He added that he hopes any dislocation over educators switching health insurers and providers will be minimal.
The abortion restriction mirrors a legislative effort during the 2013 Georgia General Assembly. The move was backed by Gov. Nathan Deal, but failed to pass the Legislature.
“It certainly is an emotional issue,’’ Reese told reporters after the board meeting. “I think the plan has the discretion to make this decision.’’
Community Health will also continue its pursuit of another insurer to offer coverage in the metro Atlanta region. Reese said he hopes that if a winner is selected, its HMO option will be in place before open enrollment begins Oct. 21.
Reese, who took over as commissioner July 1, has acknowledged that the regional vendor contract was ‘‘not properly inclusive’’ and that he has decided to rebid it. His decision followed a strongly worded protest by United to the pending award to Blue Cross.
“In what has to be one of the most egregious examples of a state entity acting outside the boundaries of Georgia procurement law, the Department of Community Health . . . is conducting a secret, hidden procurement for one or more 2014 health insurance plan,’’ said the United protest.
In a statement Thursday after the Community Health meeting, United pointed to a reduction in employee choice under the new state plan.
“Competition in the Georgia State Health Benefit Plan is good for plan members and for Georgia taxpayers, because competition drives innovation, quality and value,” United said. “Consumer choice is important in building an affordable, accessible and sustainable health care system, so it’s unfortunate that SHBP plan members such as teachers, state employees and retirees will no longer enjoy competition in the state health benefit plan.”
The medical provider industry has expressed concern that a single insurer for the SHBP could lead to lower payments, especially with the level of savings that the state expects.
Jimmy Lewis, CEO of HomeTown Health, an association of rural hospitals in Georgia, told Georgia Health News that he fears the new Blue Cross contract will hurt already struggling rural hospitals by paying them less.
Reese said he feels the agency has a strong legal position against possible litigation over the contract. He said Blue Cross will be formally confirmed as the winner of the State Health Benefit Plan contract Friday.
UnitedHealthcare currently has more than 90 percent of the members in the SHBP, but its contract is due to expire at the end of the year.
Losing out on the bid would greatly reduce the Minnesota-based insurer’s strength in Georgia.
Meanwhile, Blue Cross is a heavy player in the health insurance exchange, or marketplace, which will begin enrollment Oct. 1 as part of the Affordable Care Act. The company, owned by WellPoint, is already the state’s largest health insurer, with more than 2 million members.