Fixes made in health insurance contract bid process
SPRINGFIELD — Stung by a highly critical audit of last year's procurement process for health care contracts for state employees and retirees, state officials promised that they will do a better job with a similar contract award this spring.
"We took a very hard look at all of the issues that were addressed in the audit and are implementing the changes that we need to make as we evaluate this and all future requests for proposals. We appreciate the guidance provided in the audit, and these are the changes we've already made," Julie Hamos, director of the state Department of Healthcare and Family Services, said as she addressed the bipartisan Legislative Audit Commission on Tuesday.
But Hamos also stressed that she did not believe last year's health care contract award — which created a furor among state employees and retirees in central Illinois — was unfair.
"We acknowledge that there were technical weaknesses in our own agency, but we maintain that this was a fair and competitive process," Hamos said. "This was the first major, complex procurement under a new procurement law. We were at all times guided by the chief procurement officer and he was working very hard to implement the new law with the complex procurement. So I think there were some issues that were legitimately raised and we are addressing them, but we maintain the result was a fair process and there was no part of this that had anything to do with politicization of procurements."
Illinois Auditor General William Holland in March issued a scathing report on the $7 billion health insurance contracts procurement process, concluding that there were "serious deficiencies" and that "we are unable to conclude whether the state's best interests were achieved" by the process.
Hamos said Tuesday that the department now will strive to avoid conflicts of interest between its contract consultants and bidders, will ensure that consultants disclose business relationships with bidders and vendors, pledge that bid evaluation materials are provided to all evaluators, will make sure that evaluators address scoring differences when assessing bids, and will document the monitoring of consultants who participate in the process. All these and more were issues raised by Holland.
Attention now turns to a so-called "supplemental" HMO product currently out for bid from health insurance providers in every part of the state except the Chicago area.
Bid proposals are due May 17. Evaluations of the bids will begin the following day, Hamos said, with the timing of awards dependent on the number received.
She stressed, however, that contracts do not have to be awarded in all four regions where the supplemental HMO contract is out for bid.
"If we don't award because it is too expensive for the state and the bids come in very high, for example, or we find that the technical parts of the bid are not met, then we are already providing health care services for every member" anyway, she said, through contracts with PersonalCare and HealthLink.
Sen. Mike Frerichs, D-Champaign, agreed that contracts may not be awarded and said that state employees and retirees could again be displeased with the results of the bidding process.
"It's a distinct possibility," he said. "We don't know how it's going to go."
One significant change, though, is the decision to market the contracts by regions, making it less likely that a single provider would provide service in all of downstate Illinois, or that an employee or retiree in Danville, for example, would have to travel to Peoria for health care.
Region 3, which covers Champaign County, also includes most of eastern Illinois, from Livingston, Ford and Iroquois counties on the north to Perry, Jackson and Union counties on the south. Region 2 includes a large swath of northern and central Illinois from the Wisconsin state line through Peoria and Sangamon counties down to the Illinois suburbs of St. Louis.
"We wanted to ensure that it was a competitive process," Hamos said. "If it was that a vendor had to provide for the entire state, there was less of an opportunity that we would get some good, robust bidding at the best possible price for the state of Illinois. Our goal was to allow for some robust bidding and to encourage vendors to apply."