Second chance for Health Alliance clears panel
Bill pushed by Frerichs dinged by many as unfair to others
SPRINGFIELD — A last-minute effort that would allow Urbana-based Health Alliance to become a Medicare Advantage plan provider for state retirees was introduced Wednesday and cleared an Illinois Senate committee.
The amendment, sponsored by Sen. Mike Frerichs, D-Champaign, was approved 9-4 in the Senate Executive Committee, mostly along partisan lines. Several Democratic senators told Frerichs they'd vote to get the bill (SB 214) out of committee but offered no assurance they'd vote for it on the floor. All the no votes came from Republicans.
The Legislature has fewer than 10 days to move the bill; it is scheduled to adjourn by May 31.
A representative of insurance giant Aetna contended that Frerichs' measure was unfair. Some Republican senators agreed.
Last year, state officials did not select Health Alliance as a Medicare Advantage provider, even though it was the lowest bidder. State procurement officials said, though, that Health Alliance's bid did not meet specifications.
"What this is trying to do is to give retirees greater choice, and a lower cost for the state of Illinois," Frerichs told his Senate colleagues.
But Vernon Rowen, a lobbyist for Aetna, said it would be unfair to allow Health Alliance another chance at the contract.
"We believe it was an appropriately run (request for proposals) process last year in which three companies were successful in bidding," he said. "There were other companies that weren't successful in the bid. There was an opportunity for them to protest, to appeal the results of the awarding of the contracts."
Rowen said Aetna made "significant investments in capital and staffing" to support its Medicare Advantage program.
"We don't think it's fair for the state to treat companies like this who make investments on good reliance of a contract with the state to step in a year later in that contract and basically change the terms and start over," Rowen said.
Frerichs at first said he hoped that retirees would be able to sign up in a new open enrollment this fall, but appeared to acknowledge later that it would be virtually impossible under the state's procurement code.
He also noted that the state three years ago revised a health care contract process after problems were detailed by legislators and the state auditor general.
"We issued a supplemental RFP a couple of years ago to broaden it for competition and there were no lawsuits filed at that time," Frerichs said.
Sen. Dale Righter, R-Mattoon, noted that the auditor general had not detected defects in the RFP process for Medicare Advantage.
Frerichs retorted, "I would say that if we're going through a process that does not pick the lowest bidder for the state of Illinois, there is a problem there."
But Rowen said that sometimes the lowest bidder isn't selected in health care provider contracts.
"There's a reason there are other qualifications you want someone to meet. It's not just that someone's the lowest bidder," he said.
"It seems to me that Health Alliance made a business decision at the time, and they took a risk, right?" Rowen said. "They thought that if they had a lower price, (the state Department of Central Management Service) may well waive some of the requirements. They went ahead and submitted a proposal that didn't meet those requirements and hoped that their low price would sway CMS to waive the requirements. They made a business decision and it didn't work out for them."
He said he believed Health Alliance "made a business decision they're probably not happy about now and I'd say that this is not a fair way to redress that."
Sen. Matt Murphy, R-Palatine, said that while lawmakers may be able to reopen the process, "we also have to make that with our eyes open about what the consequences are. The potential consequences are that people add a risk premium into doing business with policymakers in the state of Illinois."