Insurance

Statewide Service Cooperative Update: State Auditor’s Report, CCOGA RFP

By William Moeller, Attorney for South Central Service Cooperative

The following is an update on the action taken since the release of the State Auditor’s Report which examined the procedures and practices of all eight coops in securing health insurance for its members, along with information on the recent City, County, and other Governmental Agency (CCOGA) Health Insurance request for proposal (RFP).

The State Auditor was greatly concerned with conflicting contracts that Creative Benefits Consultants (CBC) had with all the service cooperatives and Blue Cross and Blue Shield (BCBS). The problem has been resolved. After September 2005, CBC will no longer have an agreement with BCBS. The State Auditor’s report did not indicate evidence of CBC doing anything contrary to the best interests of SCSC.

CBC has a contract with the cooperatives that goes through 2007.  However, the coops will issue a Request for Proposal (RFP) for the consultant position, currently held by CBC, in 2006.  This reflects the stated wishes of the State Auditor and does not mean CBC will not bid on the proposal, nor does it mean that SCSC is dissatisfied with the work of CBC, only that a request had not been done in the past because CBC had done excellent work for the coops, and is qualified to act in his consultant role.

Consultant contracts have been re-drafted to address the State Auditor’s concerns. The lobbyists for the coops will all be offered modified contracts for the next year, as will the consultant position currently filled by CBC.

This summer all cooperatives issued an RFP for health insurance for the Cities, Counties, and other Governmental Agencies pool. Milliman and Associates was hired to draft the RFP, seek bidders, evaluate proposals, and make a recommendation for awarding the bid. Approximately 10 companies expressed an interest in bidding and were sent information to bid, and ultimately only BCBS bid.

HealthPartners (HP) had expressed a strong interest to bid, and then decided not to bid, claiming it did not have sufficient information to bid. As in the past, HealthPartners contacted the Minneapolis Tribune. The Tribune did a story in which HP alleged it could not bid because of lack of information. This was the same claim made when it bid on the SCSC RFP for schools, at which time HP submitted a bid and re-submitted the bid on four other occasions after the bidding process had ended. The Milliman partner in charge of the RFP was interviewed for the article. In it she said, “I believe the information in the proposal request was sufficient and standard information for preparing a bid.” The article also discussed the relationship SCSC has with Blue Cross, and complained they sued SCSC last year and reached a settlement to improve the bidding process, but further claimed SCSC backed out of the settlement agreement.

As legal representative for SCSC, I can state Health Partner’s statement is false. The matter did not end with a settlement agreement; Nicollet County Court dismissed the lawsuit by HP against SCSC because no legal basis existed for the lawsuit. SCSC attempted to reach a positive resolution with HP, seeking their input on ways to improve the perceived problems with the bidding process. HP’s recommendations were brought to the SCSC Board, and those recommendations were not accepted because Blue Cross would not take a position on HP’s proposals.

Simultaneously with the release of State Auditor’s report, all coops decided to let the CCOGA RFP be handled by an unbiased third party. This is exactly what HP had been asking for after its lawsuit was dismissed. Still, HP decided not to bid, and its stated reasons for not bidding just seem unsupportable.

The State Auditor requested the coops to do what is necessary to increase competition in the bidding process. All coops incurred a substantial expense for the CCOGA RFP process using Milliman, making the process as open as imaginable; however, the process produced only one bid by BCBS.

Representatives of SCSC met with the State Auditor’s attorneys making them aware that SCSC intends to adopt most of the State Auditor’s recommendations. The lone exception is the use of a Research and Development fee that Blue Cross pays to all coops for the use of the medical network created by CBC and given to the coops. Those fees have been used for research and development in addition to lobbying and legal work necessary to sustain a self-insured pool.

If you have any questions or concerns regarding the State Auditor’s report or the CCOGA RFP, please contact me: BMoeller@bgklaw.com, or phone: 507.345.1166.

South Central Service Cooperative is proud to introduce our new 2006 Group Medicare Advantage and Part D integrated program underwritten by Humana, Inc. This program was designed to offer you - our member groups – an affordable, comprehensive new option that you in turn, would share with your Medicare-eligible retirees.

Our intent in making this program available to you now is to provide you with a simple solution to the overwhelming changes in the Medicare program that have or will occur very soon as a result of the 2003 Medicare Modernization Act. We believe our program can be a tremendous value to you and your retirees regardless of your circumstances.

In other words, whether you are considering the federal subsidy under Medicare Part D or not, this program can be of tremendous value to you by offering comprehensive affordable medical coverage with or without comprehensive prescription drug benefits to your Medicare retirees. (Please note our prescription drug benefit well exceeds the Part D minimums set forth by Medicare (i.e., CMS).

An information meeting will be held on October 11, 2005 – 9:30 a.m. at the Mankato Intergovernmental Building. Please remember, time is of the essence as several critical deadlines and dates are fast approaching. Here are just a few:

• October 1, 2005: CMS benchmarks are expected that will enable insurance carriers to do final pricing. A massive literature and media campaign is expected which may be confusing.
  
• October 15, 2005: Expected rollout of our Medicare program to include enrollment meetings throughout our region.
  
• October 31, 2005: Recent extension granted by CMS for employers or groups interested in applying for the 28% prescription drug subsidy.
  
• November 15, 2005: Open enrollment period for Medicare Part D-Only coverage begins which will go until May 15, 2006.
  
• January 1, 2006: Medicare Part D coverage begins for those who have enrolled in a plan by December 31, 2005.

Contact Wanda Sommers Nielsen: 507.389.1076, email: wkn@frontiernet.net for further information.