Health Alliance seeks reversal of state insurance bid

SPRINGFIELD — Health Alliance Medical Plans is asking a judge to overturn the health plan contracts that have state employees and retirees scrambling toward a June 17 enrollment deadline.

The Urbana insurer filed a lawsuit at the close of the day Friday in Sangamon County Circuit Court against the state and several of its departments and officials involved in the selection of new managed-care plans — among them the Department of Healthcare and Family Services and its Director Julie Hamos and the Department of Central Management Services and its Director James Sledge.

The suit also names several insurance bidders — including Blue Cross and Blue Shield of Illinois, Humana, PersonalCare and HealthLink.

Health Alliance is asking the court to:

— Declare the bidding process was conducted unfairly and illegally.

— To compel Hamos to reverse the award of the new contracts that went to Blue Cross and Blue Shield, HealthLink and PersonalCare.

— Enter a judgement declaring the denial of Health Alliance's protests of the new contract awards were wrong and contrary to the law, and order the state's Chief Procurement Officer Matt Brown (also named in the lawsuit) to uphold the protests.

— Prohibit Hamos from expanding and continuing self-insurance for state employees and retirees over the wishes of a legislative body, the Commission on Government Forecasting and Accountability, that voted 8-3 on May 25 to "not give advice and consent" to that action.

Health Alliance's lawsuit contends the company was subjected to unfair treatment in the bidding process. For example, it states, the Department of Healthcare and Family Services said it would ask Health Alliance for additional "best and final offers" for the HMO request for proposals and then didn't ask.

The lawsuit also contends the state's consulting firm on the insurance bids, Mercer, had a commercial relationship with at least two of the insurance vendors, and that Health Alliance got a lower score on Open Access Plan bids due to errors in the scoring.

Health Alliance's lawsuit also contends the state violated its own requirement that bidders have provider networks in place by Jan. 1, and the award of HMO contracts to Blue Cross and Blue Shield "was based on the false assumption that the winning bidder would develop a provider network on a statewide basis."

The state is contracting with Blue Cross to provide HMOs for 38 counties.

Health Alliance further contends it was the only responsive bidder that has an HMO plan accepted by providers of nearly 79,000 state employees.

Health Alliance Medical Plans officials weren't available to comment on the lawsuit.

Mike Claffey, spokesman for the Department of Healthcare and Family Services, said the agency remains confident it followed the state procurement code "to the T" and that was verified by the Executive Ethics Commission.

"We would also note that the plaintiff in the legal action had an opportunity to object to the RFP (request for proposals) at the beginning of the process, and chose not do so. Now, after losing the award and after the denial of their protest, they have turned to the courts."

What does this mean to state employees with less than two weeks left to enroll in new health plans?

"We will continue the process of contracting with the winning bidders," Claffey said.

State group health plan members are advised to continue with the enrollment process and to keep the June 17 deadline in mind, he said.

"We are absolutely confident in the process of awarding and contracting with these vendors as well as their ability to offer quality health care at a price that will save the state money during these tough fiscal times," Claffey said.

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