State affirms benefit contracts; court fight likely

Print Friendly and PDF By: Andy Miller Published: Nov 7, 2013

The commissioner of the Department of Community Health on Thursday upheld the award of the state employees’ health benefits contract to Blue Cross and Blue Shield of Georgia.

The decision comes a day before open enrollment closes to members of the State Health Benefit Plan, which covers more than 650,000 state employees, schoolteachers, other school personnel, retirees and dependents.

Clyde Reese, the DCH commissioner, also upheld the award of the pharmacy benefits management contract to Express Scripts.

iStock_000023217379LargeThe contract award sparked intense criticism from UnitedHealthcare, which charged that the bidding process was flawed and needed to be redone.

United currently holds the SHBP contract, along with Cigna, which also protested the award. That contract expires at the end of the year.

Blue Cross emphasized in a two-day hearing last month that its contract will save the state more than $1.5 billion.

Reese noted that state law allows DCH “the flexibility to pursue the approach that provides the best value in the state’s interest.’’

Attorneys for United Healthcare said late Thursday that the fight was not over. “Our next step is to pursue remedies before the Fulton County Superior Court,’’ Chuck McMullen, managing director of the law firm McKenna Long & Aldridge, told GHN in an email.

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

“The DCH decision reinforces what we knew all along,” Robert Bunch, a Blue Cross official, said in a statement. “We participated in the bid process in an open and transparent manner as stipulated by the state and were awarded the contract based on our merits as a best-in-class insurance provider. We are excited to provide state employees and their dependents with the quality health insurance experience they deserve.”

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

Employee members, too, have criticized the lack of a choice of providers.

United had argued that it had not been allowed to submit a bid that combined medical management and third-party administration functions, even though that’s what the state ultimately decided to do in the contract. A United official said last month that the company’s bid would have been lower if the state had allowed it to combine the two functions.

And the official, Kimberly McCurdy Spence, also said the state “changed their strategy’’ in the middle of the contract process by choosing just a single health plan design, after requesting that bidders submit proposals for multiple designs.

But Reese, in his ruling, said that because the agency received all bidders’ proposals that included the single design, all companies “were given the same opportunity to make their best offers to the state in this regard.”

He also said Blue Cross was allowed to submit additional cost savings after being identified as the highest-ranked bidder.

The contracting process has taken many unusual turns, including the Community Health board in September rejecting the option of Kaiser Foundation Health Plan’s HMO to metro Atlanta employees in the SHBP. The opponents said offering a choice of health plans in only one region would be unfair to the rest of the state.

Reese, in his ruling, said the second attempt to bid out a regional HMO contract was an “open, competitive, and inclusive’’ process, even though the agency board voted against that award.

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