United claims Blue Cross got special favors

Print Friendly and PDF By: Andy Miller Published: Aug 13, 2013

UnitedHealthcare has filed a strongly worded protest of the awarding of a state employees benefits contract, alleging that Georgia officials “rigged’’ the bid in favor of a competitor.

A letter from United and its attorneys at law firms Alston & Bird and McKenna, Long & Aldridge asks the Department of Community Health’s commissioner to review the award made to Blue Cross and Blue Shield of Georgia, which was formally announced Friday.

The attorneys’ letter, dated Monday, alleges the agency engaged in “state-sponsored bid-rigging.’’

Blue Cross was the single insurer selected to deliver health plan administration and medical management services to the more than 650,000 state employees, teachers, other school personnel, retirees and dependents in the State Health Benefit Plan.

(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.)

United’s protest letter accuses the Department of Community Health (DCH) of engaging “in a biased, unfair, opaque, and uncompetitive process more like the ‘old Georgia’ of backroom deals and shady politics than a state government that, at least on the surface, claims to value free and open competition.

“It is odd that a state that has lambasted the Obamacare health care exchanges, which at least offer participants a choice among insurance providers, will now funnel the vast majority of its employees, teachers, and retirees into a single, hand-picked insurer that already has a substantial market share in Georgia,’’ the letter continued. “And DCH is doing this after engaging in a procurement process that was rigged from the start.’’

DCH said Tuesday that it would not comment on the letter because it involved an ongoing legal dispute. Blue Cross, in an email to GHN, also did not comment on United’s allegations.

“We are pleased that the state selected BCBS Georgia . . . through an open, transparent and public process where it determined that our proposals provided the best value-based solution for the state,’’ said the email from Blue Cross spokesman Bert Kelly. “We look forward to working with the state to improve health outcomes and to reduce health care costs.’’

Earlier this month, Clyde Reese, who took over as DCH commissioner July 1, acknowledged that a separate, “regional” vendor contract for the metro Atlanta area was ‘‘not properly inclusive’’ and that he had decided to rebid it. His decision followed a protest by United, which called the regional contracting for the State Health Benefit Plan (SHBP) a “secret’’ bid.

But Reese also told reporters last week that he felt the agency has a strong legal position against possible litigation over the contract, and he denied bid-rigging was involved.

The new benefit plan will reduce premiums for many employees and teachers, state officials said as they announced the contract winner.

The Community Health board last week approved the new benefit plan design and rates in an unusually contested 5-3 vote, with one abstention.

Board member Jamie Pennington protested that some SHBP members in one area of the state could have a choice of insurers — if a regional insurer is also picked — while those in other regions won’t have a selection of plans.

United’s protest letter focuses on the state’s original request for bidders to submit proposals for three types of medical plans – an HMO, a PPO/Health Reimbursement Arrangement (HRA) and a high-deductible health plan.

But the United attorneys allege 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.

“DCH unilaterally and without any notice amended the terms of the Public RFA [request for approach] to its favored bidder, jettisoned two plan designs that had formed the basis for UnitedHealthcare’s submission, and contracted with Blue Cross Blue Shield for a PPO/HRA-only Third Party Administration and Medical Management contract,’’ the letter stated.

“There is simply no dispute that Georgia law prohibits a state agency from asking for one thing in an RFA and then contracting for something else.’’

Emails from state officials prove the bid was steered to Blue Cross, Chuck McMullen, managing director of McKenna, Long & Aldridge, told GHN.

Separately, he said, United has filed a motion for a temporary restraining order and an injunction in Fulton County Superior Court.

The letter also said that DCH requested a bid on integrating medical management and health plan administration “from only a single bidder — Blue Cross Blue Shield — and directed UnitedHealthcare and all other bidders that they could not submit an integrated proposal.”

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

And the president of the Georgia Association of Educators says the state health plan has never before had a single statewide insurer. “This single provider decision is unprecedented and unfortunate as we know from previous experience no single insurance provider is capable of statewide coverage,” said a statement from Calvine Rollins of GAE.

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