Lawmakers blast insurance bid process

Lawmakers blast insurance bid process

SPRINGFIELD — Members of a state legislative commission say they're upset about a state retiree health care contract award, but admit there's virtually nothing they can do about it.

Urbana-based Health Alliance underbid four competitors chosen to provide Medicare Advantage plans for state retirees, but its bid was disqualified on a technicality.

And the decision to not grant Health Alliance a waiver from those bid requirements will cost the state millions of dollars over the two-year term of the contract, say local legislators.

"We have the ability to exercise oversight. Unfortunately with this contract we don't have the ability to veto their choices," said Sen. Mike Frerichs, D-Champagn, co-chair of the Legislature's Commission on Government Forecasting and Accountability, which held a hearing on the contract award Wednesday. "I think they left a lot of savings on the table. And at a time when the state has significant budgetary problems, that's very problematic to me.

"I think if you're looking at something in the magnitude of some $50 million in savings — they said they didn't know but that was one estimate put out by Health Alliance — $50 million is a lot to leave out there."

The situation is different from two years ago when COGFA was able to reverse a state Department of Central Management Services decision preventing Health Alliance from winning a state employe health insurance contract.

This time the insurer was eliminated because it didn't meet a series of requirements. The state required vendors seeking the Medicare Advantage contracts to show they had at least five years' experience administering Medicare Advantage plans, plus at least three years' experience administering Medicare Advantage plans for at least one employer with a minimum 1,000 participants enrolled. Bidders also had to show at least one year's experience administering a Medicare Advantage plan for a government employer with at least 500 participants.

Health Alliance filed a waiver to be relieved of the requirements but was denied by Matt Brown, the state's chief procurement officer.

State Sen. Chapin Rose, R-Mahomet, another member of COGFA, said he believed the requirements were a ruse to keep Health Alliance from winning the contract.

"There's no doubt in my mind they deliberately went out of their way to make sure that Health Alliance could not bid this contract," Rose said. "Why would you write a requirement knowing that these guys can't qualify? Then twice they asked to have it waived, and Matt Brown said no."

State Rep. Chad Hays, R-Catlin, said, "I have people openly asking me, does this reek of a vendetta?"

But Janice Bonneville, deputy director of benefits for CMS, said the requirements were developed "after consultation with Segal Consultants of Chicago" which said the requirements were "lower than what they've seen in other states who are bidding these same kinds of products."

Like Frerichs, Rose said he thought Illinois taxpayers were being hurt by the contract award.

"The good news for constituents locally is that you'll be able to go to Carle through the PPO (provided by United Healthcare). Apparently there's no difference between the in-network and out of network providers on that. I talked to Carle and they said they wouldn't charge people upfront and would direct bill United Healthcare. For constituents there's a place to go. But that is separate and apart from whether taxpayers got the best deal. That is the next battle."

Among options for legislators, he said, are to ask CMS to do a regional provider rebid so that Health Alliance's alleged savings could be realized, or to allow lawmakers to do an investigation, using subpoena powers, of the bid design.

Hays, who is not a member of COGFA but attended Wednesday's hearing, said the CMS award was "illogical."

"CMS is telling somebody who has worked for the last 25 years that the doctor you go to and the health plan that has taken care of you is fine but in your retirement years, somehow they don't have the capacity to provide the same kind of coverage. That is illogical to me and I think it begs a lot more questions," he said.

In the meantime the approximately 128,000 retirees and dependents covered in the state plan have between Nov. 12 and Dec. 13 to sign up for a Medicare Advantage plan. Seminars to help with the decision have been scheduled for Nov. 13 at Danville Area Community College and Nov. 15 at the Illinois Terminal in downtown Champaign.

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EdRyan wrote on October 24, 2013 at 7:10 am

The bid specs were written so that only the "bigs" would be able to win the contract.  Writing bid specifications so that you get the winning bidder you want is an art form that I'm sure CMS could give master classes on.

airrecon wrote on October 24, 2013 at 10:10 am

Is it possible that C M S stands for Crooked Management Services?