SPRINGFIELD — State employees and retirees who don't like the health insurance choices they make by the new June 17 enrollment deadline are going to get a second chance later in the year.

Illinois Department of Healthcare and Family Services spokeswoman Stacey Solano said a second enrollment will be held before the end of the year because state members have to choose health plans while adjustments are still taking place in provider networks.

Some may wind up in a plan that costs them more because of that, so they'll get a chance to switch sometime in the fall, when the market settles, she said.

"We want to make sure members have the option to look again and see if it's working best for them, and change if they want," she said.

State Rep. Chapin Rose, R-Mahomet, expressed disgust after asking the administration questions (such as, will people have to pay two deductibles if they switch?) and says he couldn't get any answers.

"This whole thing is completely asinine as far as I'm concerned," he said.

The fracas over state health insurance contract selections continued into the holiday weekend, after the Executive Ethics Commission denied the protests filed by Health Alliance Medical Plans and Humana — two companies that weren't selected — earlier this week.

The General Assembly's bipartisan Commission on Government Forecasting and Accountability quickly refused to consent to the new self-insurance program, and several lawmakers said they hope to see the insurance contracts rebid.

A bill sponsored by Sen. Mike Frerichs, D-Champaign, that would undo the new insurance contracts and continue existing coverage for two years passed the Senate on Friday. The bill now heads to the House, where it may face a tougher time.

The conflict is sending mixed messages to some 100,000 state members in Health Alliance and others who are being told they need to sign up for new health plans by June 17.

Health Alliance has told its members there's no rush to make a change, while the administration is urging those members to get going on making new choices.

"I'm hearing rumors that benefits choice is still up in the air, and we want to make sure they know it's time for members to start doing some research on those plans and start making some choices," Solano said. "You have three weeks to look into these and figure out which option works best for your family."

Complex selection process

Health Alliance bid on both the HMO and Open Access Plan contracts, and was rejected for both because it wasn't competitive in terms of costs and price, according to the state agency.

But price was weighted differently in HMOs and Open Access Plans.

Price, which referred to what the state would pay the insurance vendor, was 70 percent of what was taken into consideration for HMO contracts and just 28 percent of what was considered in OAP contracts.

Colm Brewer, budget chief of health care purchase at the Illinois Department of Healthcare and Family Services, said price counted for so much in the HMO contracts because they're fully insured plans in which the state pays the vendors a fixed amount of money each month per member to pay all the medical claims and assume the claim risks.

"It includes all the costs, so price is very, very important," Brewer said.

On the self-funded OAP plans, however, vendors are paid a smaller fee to administer and adjudicate claims, while the state assumes the risk and pays each claim amount billed.

So other factors — such as provider networks, management of disease and service use, and negotiating good discounts on medical services — were weighed more heavily in the OAP bids.

"The OAPs negotiate with the providers for us to get good discounts. It's their job to help us keep our total claim expenditure down," he said.

Health Alliance didn't measure up as well as the other OAP insurance bidders on its provider discounts, Brewer said.

And while its network of tier one providers was strong, its tier two network on these three-tier plans was spotty, he said.

Data errors?

Health Alliance Chief Financial Officer Gordon Salm points out tier one offers the greatest savings for both the state and its group plan members, because tier one providers are subject to the deepest discounts, and members are subject to the least out-of-pocket costs.

"Tier two is the inferior network, and we're being penalized for not having everybody in tier two? It makes no sense," Salm said.

Salm contends Health Alliance found errors in the Mercer report summarizing the bid analysis that show the following:

— Health Alliance actually offered better discounts than HealthLink, one of the two Open Access Plan bidders selected, for the providers serving 80 percent of Health Alliance members. Those members largely live in east central, west central and southern Illinois.

— In two other markets in which Health Alliance was found to offer poorer discounts than HealthLink — Chicagoland and greater St. Louis — the state's data couldn't have been correct, Salm contends. Health Alliance rents HealthLink's provider networks in those areas for its members, so the discounts would have been the same as HealthLink's, he said.

— The Mercer report showed PersonalCare with the best provider discounts, even in East Central Illinois. That's particularly galling to Health Alliance executives, because that data assumes PersonalCare would get a better discount from Carle — Health Alliance's parent company — than Health Alliance can.

"They're saying we assume Carle providers will contract with PersonalCare at tier one at better discounts than they give Health Alliance, and that's a pretty darn big assumption," Health Alliance spokeswoman Jane Hayes said.

What PersonalCare has or hasn't arranged in the way of provider contracts and discounts is unknown. The company hasn't returned calls to The News-Gazette.

Salm says he believes the big fallacy in a shift to the self-funded Open Access Plans from HMOs is that it ignores the fact that HMOs provide incentives for care providers to keep members healthier by paying providers using capitation — in which a set amount of money is paid for each member's total care.

Under self-funded plans, providers don't have that incentive because they get paid by the service, he said.

"It's about the coordination of care and the cost-effective delivery of care," he said.