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Was the bidding system biased?

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Illinois

* It’s no surprise that when the state announced a major change to the health insurance of over 100,000 state employees, retirees and dependents that lots of folks were upset. People don’t like change, especially when it comes to this stuff. Adding to the sturm und drang is what happened the last time a governor (Rod Blagojevich) attempted to pick a new health insurer. It was done in such a shady manner (changing the bid specs midstream) that even Blagojevich had to back off.

So, I decided to ignore the uproar until I could see whether this new announcement was legit. I didn’t really believe the $100 million annual cost savings projected by the administration because I never totally trust their numbers. But I was troubled by a contract provision requiring insurance providers to have networks in place by last January 1st. The winning bidders Downstate appear to have only “open access provider” plans in place, which critics say is far more expensive for employees. Here’s a chart being distributed at the Statehouse by losing bidder Health Alliance, which currently has the contract. Click the pic for a larger image…

* But, the change could also be lots more expensive for taxpayers…

[Rep. Chapin Rose, R-Mahomet] said he based his projection of $100 million in additional [taxpayer] costs on information in a Commission on Government Forecasting and Accountability report that found it will cost taxpayers $1,000 for every person covered by a state health plan who switches from an HMO to one of the lower two tiers of the three-tier open access plans. Health Alliance currently covers nearly 100,000 state employees and retirees in its HMO plan.

Rose contends most of those Health Alliance state members would have to choose those lower-tier open access plans because Health Alliance has exclusive HMO contracts with Carle and several other providers. And the top tier in PersonalCare’s and HealthLink’s open access plans would be unavailable to state members at Carle because they will be HMO plans.

According to Rose, the Quinn administration believes Carle and other providers will just break their exclusive contracts and sign on with the available state health plans, but there’s no incentive for providers to do that when people are likely to migrate to the more expensive open access plan tiers to keep their current doctors.

“I just don’t see the projected savings,” said Sen. Mike Frerichs, D-Champaign.

* And Health Alliance is also objecting to how the bidding was scored…

[Health Alliance spokeswoman Jane Hayes] said Health Alliance officials decided to protest the proposed open access contracts in addition to the HMO contracts after learning Monday that the requests for proposals submitted by insurers were scored differently for HMOs and open access plans.

On HMO plans, she said, 70 percent of the state’s consideration was pricing and 30 percent of the consideration was quality, provider network and other non-pricing factors.

On open access plans, she said, it was the other way around: Just 28 percent of the consideration was pricing and the rest of the consideration went to quality and other factors.

Yet, Hayes said, the two selected open access plans which are structured with three different service level tiers and out-of-pocket costs for each will include HMOs on their first tiers.

To some, this might look like the administration set the bidding specs to favor open access plans and against incumbent HMO providers.

* Humana has now joined Health Alliance’s protest. Humana covers around 15,000 state employees and retirees in an HMO.

Thoughts?

* Other stuff…

* State leaders talk about shifting teacher retirement costs

* Cities ask state for more money

* State Services For The Homeless Face Severe Cuts

posted by Rich Miller
Thursday, Apr 14, 11 @ 10:24 am

Comments

Bid rigging in Illinois?

That’s UNPOSSIBLE!

Comment by John Bambenek Thursday, Apr 14, 11 @ 10:28 am
If it wasn’t rigged, it was at least dumb. I’d vote for dumb.

Comment by Anon Thursday, Apr 14, 11 @ 10:39 am
Where is that new and fabulous “Ethics” department? Don’t they have approve everything now?

Did the Procurement Policy Board sign off on this? If so, is this the new procurement policy?

Comment by Joe from Joliet Thursday, Apr 14, 11 @ 10:45 am
Well, Rose and Frerichs represent Health Alliance’s headquarters, so it’s important to keep that in mind.

Also, I think the Health Alliance mailer above is a little off, seems a little high for primary care visits. Also, a $200 deductable is very favorable along with a $600 maximum cap.

I’m not saying this wasn’t a fair process. I’m just wondering if this is a company not getting the bid and crying foul.

Comment by Ahoy Thursday, Apr 14, 11 @ 10:47 am
My biggest concern is that this may set contracts that are actually in opposition to some of the points to health care reform, specifically around Accountable Care Organizations.

Part of ACOs are building narrow networks for cheaper health coverage and a heavier emphasis on wellness and prevention. However, in this case the state maybe going in the exact opposite direction. Plans like this one are more expensive, do not set the standard that the health care organization take on some of the risk and are not designed to push recipients to have preventive appointments (ie physicals) nor do they heavily encourage wellness initiatives. Yes, in reality the construction of ACOs and health care reform builds a system similar to the work of HMOs. Sure does seem difficult for the president when his home state is going in the opposite direction during this time of significant changes.

Comment by A.B. Thursday, Apr 14, 11 @ 10:50 am
after thrashing around on procurement reform for several years..it appears this one misses the boat
so it seems highly unlikely that any part of it will become the law of the land

Comment by CircularFiringSquad Thursday, Apr 14, 11 @ 10:51 am
You can check out what each plan is currently offering until the end of June at this link to verify the accuracy of these figures.

http://www.state.il.us/cms/download/pdfs_benefits/FY11Seminar-StateBook-qxd.pdf

Comment by Concerned Employee Thursday, Apr 14, 11 @ 10:51 am
I guess I’d be careful about claiming any savings when signing a new health plan, unless you’re cutting coverage and raising employee premiums and out-of-pocket.

But I’m not sure what the single Health Alliance scenario proves, either. Is that supposed to represent some average annual experience? It’s not the average stuff that whacks you — it’s the big stuff.

Chapin Rose was throwing around $1.5 billion in LINK fraud yesterday without any backup. Like the old math teachers used to say, I want to see how you got the answer.

Comment by wordslinger Thursday, Apr 14, 11 @ 10:54 am
In order for the state to achieve the claimed $100 million savings, BlueCross BlueShield would have to reduce every current Health Alliance participant’s annual cost by $1,000.

That is just not credible.

What is credible though is that by pushing Health Alliance members into the Open Access and Quality Care plans the state can use these self-insured, reimbursement programs to delay payments and push off bills.

Remember that with Quinn everything is always about cash flow — just like his bogus $3 billion in cuts.

Comment by Do the Math Thursday, Apr 14, 11 @ 11:21 am
Health Alliance has been a great insurance for me and my family. An office visit to your primary physician is a $15 co-pay, a specialist visit is a $20 co-pay. ER is $200 and hospital admittance is $275. There’s no cap on any of it that I know of. Don’t know who we’ll choose now…

Comment by Hey Joe Thursday, Apr 14, 11 @ 11:56 am
I forgot to mention that my wife had a very expensive surgery. All she paid was the $275 to the hospital and she didn’t owe a dime to the surgeon or anesthesiologist or hospital…. you get my drift.

Comment by Hey Joe Thursday, Apr 14, 11 @ 11:58 am
Isn’t it a little ironic (or is the word hypocritcal) for the legislators who voted to push 50% of Medicaid clients into managed care in order to save the State money, even though that would disrupt their relationships with their Doctors, to now cry foul when the State proposes to save money in a way that MAY (and only MAY) cause some “higher class” folks who get their health care paid for by the State to have to change doctors. And I say “MAY” because it is inevitable that the doctors and hospitals will revise their relationships with Blue Cross rather than risk losing all those patients as clients.

Comment by Anonymous Thursday, Apr 14, 11 @ 1:05 pm
Great Joe, all you paid was $275, so who paid the rest? The taxpayers.

Comment by Anonymous Thursday, Apr 14, 11 @ 1:07 pm
@anonymous

Yeah, because Joe is on the “Only Joe” Healthcare plan. Get a grip.

Health Alliance is a very well run insurnace company that offers excellent service to it’s customers. I’m sorry if you are not getting that type of service from yours.

Comment by How Ironic Thursday, Apr 14, 11 @ 1:13 pm
Each person being covered by state health insurance should have a block amount deposited into a Medical Savings Account and then buy their insurance on the open market. They can select any plan they want, and if they do not use the money, they should be allowed to roll the money over in the account, or withdraw it after paying taxes.

Comment by Anonymous Thursday, Apr 14, 11 @ 1:18 pm
Except, anonymous, in many cases it appears that the state is actually trying to push some of us out of managed care. It’s not even all about changing drs…try more like are there enough drs to remain with managed care.

If it’s a matter of just drs/hospitals revising contracts, am I to only assume then that when HA says many of their providers are currently locked into contracts with HA that these contracts can just be torn up and discarded and in a very quick short time frame?

Comment by Cindy Lou Thursday, Apr 14, 11 @ 1:18 pm
- Anonymous - Thursday, Apr 14, 11 @ 1:18 pm:

Was me.

Comment by Cincinnatus Thursday, Apr 14, 11 @ 1:19 pm
Health Alliane, the plan owned by Carle clinic that fails to mention the finacial kickbacks it gives to its own doctors for not prescribing medications and procedures?

The reason it has exclusive contracts with health alliance is bacuse it manpulates the market in what should be an illegal relationship by providers owning the health insurance plan they give preferential dealings too?

Comment by Ghost Thursday, Apr 14, 11 @ 1:35 pm
Lets not forget that in addition to state employees paying their premiums, they must also pay the state a monthly contribution to help the government pay for the healthcare. It is a tiered system based on what type of insurance plan you have (Managed Care/Quality Care) and how much you make. That’s another $654 for me a year in addition to premiums and costs for services.

Comment by Concerned Employee Thursday, Apr 14, 11 @ 2:12 pm
$654 a year for health insurance is a quite a deal. I don’t think people outside of state government are getting that kind of bennifit… because no company can afford it and neither can the state.

Comment by Ahoy Thursday, Apr 14, 11 @ 2:34 pm
Ahoy - He said ANOTHER $654 per year. As a state employee with 3 dependents, I pay @ $300 per month for my part of the insurance premium. $3600 per year ain’t chicken feed.
One argument for Health Alliance that I haven’t seen here is the drive factor. South of I-80, Health Alliance is a dominant insurer. How far will folks in Marion have to go to find a doctor that will take BCBS?

Comment by lincolnlover Thursday, Apr 14, 11 @ 2:55 pm
lincolnlover,

Someone in the private sector can expect to pay more than 4k for insurance with a deductible of 2.5k while enjoying the privilege of paying part of a state worker’s insurance through taxes to boot.

It’s difficult to share your pain.

Comment by Cincinnatus Thursday, Apr 14, 11 @ 3:03 pm
- Someone in the private sector can expect to pay more than 4k for insurance with a deductible of 2.5k while enjoying the privilege of paying part of a state worker’s insurance through taxes to boot. -

I don’t. My private sector friends don’t, either. I mean if we’re going with anecdotal evidence mine is as good as yours, right?

Comment by Small Town Liberal Thursday, Apr 14, 11 @ 3:07 pm
I’ve thought for a couple years that state employees pay far too little for healthcare. I had HA covering my family the last 3 years I was a state employee. When I left state employment and we looked at signing for an identical HA plan through on of Illinois’ largest companies, the cost for premiums was three times what I had been paying. Is my husband’s salary 3x what a comparable state employee makes? No.

Comment by Rayne of Terror Thursday, Apr 14, 11 @ 3:20 pm
@STL

Really…it’s difficult to argue with a person that uses ’someone’ as their posterchild for supposed over generous state benefits.

Comment by How Ironic Thursday, Apr 14, 11 @ 3:22 pm
http://ehbs.kff.org/?page=charts&id=1&sn=6&p=1

Comment by Cincinnatus Thursday, Apr 14, 11 @ 3:23 pm
http://www.ahipresearch.org/pdfs/Individual_Insurance_Survey_Report8-26-2005.pdf

Feel free to adjust for inflation and increasing healthcare costs, figure about half again as much.

http://systocracy.com/NCHCReport.7.20.09.pdf

Comment by Cincinnatus Thursday, Apr 14, 11 @ 3:32 pm
–Ahoy - He said ANOTHER $654 per year. As a state employee with 3 dependents, I pay @ $300 per month for my part of the insurance premium. $3600 per year ain’t chicken feed.–

Yeesh, I don’t know your coverage, but I’m laying off 3.5 times that. My coverage is golden, but I pay it with four dependents because the risks are through the roof.

One kid falls off a slide and breaks her arm, and there’s $15,000. A pregnancy on your own terms, off the charts. God forbid, something really bad? You’re bankrupt.

We haven’t even begun to address health care costs and liability in this country.

Comment by wordslinger Thursday, Apr 14, 11 @ 3:40 pm
The thing that is so crazy about the State’s decision is that NOBODY benefits. In Champaign-Urbana, there are no other HMO’s to move to. The open access plans one would move to are more expensive, for both the state and the patient, and the local providers outside Carle do not have the resources to handle a flood of patients moving from Health Alliance/Carle, so that service would be degraded at the other providers.

I myself have been with Health Alliance and its precursors for almost 40 years. Among other trophies of getting old, I suffer from glaucoma. For those who might not know, glaucoma is tricky to manage, because there is a wide variation in how individuals respond to different treatments, so the physician and patient need to experiment a bit to find the right eye drops to lower the intra-ocular pressure in that person, and thus prevent the disease from progressing to complete blindness. I am fortunate to have a doctor who understands this process and who explained it completely clearly to me, and who continually monitors me to ensure the regime is continuing to work. My story is not unique. Many people have long term relationships with their providers through Health Alliance that should not be disrupted.

Comment by jake Thursday, Apr 14, 11 @ 3:43 pm
The state of Illinois has over 75,000 employees. It should be compared to companies that have at least 50,000 employees, not indepents employers or small companies. Most major corporations provide subsidized insurance to their employees. That is why many people opt to work for State Farm, Catepillar, Boeing, etc.

Comment by lincolnlover Thursday, Apr 14, 11 @ 3:54 pm
lincolnlover,

Are you saying that somehow public sector employees should be considered some sort of protected class of individuals? I believe most of the people in this state work for themselves, or small business. These are the people that pay public service employees benefits, which are better than their own, an these are the people who work in businesses that offer nowhere near the assurances of stable employment as those in government.

And your point is?

I am not turning this into public employee bashing, but I believe your comment really sums up how many in government employment feel about the “little people” who pay the taxes that pay the salaries and benefits. It would behoove public employees to understand and appreciate this inconvenient truth, and to provide a little consideration, at least a little less whining would help public employee’s case when the public looks upon them.

Comment by Cincinnatus Thursday, Apr 14, 11 @ 4:15 pm
My husband owns his own business. That is why I chose to work somewhere that benefits are part of the compensation package. No, public employees are not a protected class - and I don’t know how you constued my statement to read that way? But,neither are they lower than those who pay taxes - we pay those taxes too. As for you not turning this into public employee bashing, you’ve done a great job for not trying.

Comment by lincolnlover Thursday, Apr 14, 11 @ 4:20 pm
Lincolnlover said,

“$3600 per year ain’t chicken feed.”

No, it’s not. It is, however less than a person in the private sector can expect to pay for lesser coverage, as you verify by your choice to work for the state. I don’t begrudge you this, trust me. But other wizards here seem to refuse to understand that the state benefits are actually a pretty sweet deal when compare to what the rest of the poor schlubs are paying.

I honestly feel that public employees have a pretty sweet deal. That doesn’t bother me half as much as the rationalizations, whining and complaining we see on this discussion board by public employees and their staunch supporters whenever even a hint of discussion about their benefits and employment security is discussed.

I think I took too hard of a line singling you out by name. It wasn’t my intent to pick on you. Sorry for that.

But I will stand by my comments about how people in the private sector are hit at least as hard as those working for the government. And I also stand by my thoughts that public employees would be well served to understand the private employees position. It is politically smart for the public sector to stop whining…

Comment by Cincinnatus Thursday, Apr 14, 11 @ 4:37 pm
I understand your view. But, I think what you see from people on this blog and others is a reaction by public employees to being singled out as budget villains. I have been verbally assaulted by people I know who do not have pensions or other benefits. They resent that I have those and I can understand their viewpoint. However, human nature being what it is, when someone throws a punch at you, you punch back. Most of the people I work with understand that there is going to need to be changes. They just don’t want to be looked upon as “welfare” recipients because they happen to work for the state. And, most of us DO appreciate the bennies. That is why we are still here. Working for politicians is not an easy thing to do. In many ways, this is a much harder job than I had in my 20 previous years in the private sector (where I had good insurance that my employer paid for - sorry, couln’t help it!)

Comment by lincolnlover Thursday, Apr 14, 11 @ 4:48 pm
Hamos is saying this will save the state 100 million.
BCBS has little to no network downstate. The majority
of state employees will move to the open access
plans which is more costly to the state. This isn’t about saving the state money. It’s about destroying Health Alliance.

Comment by Nun99 Thursday, Apr 14, 11 @ 4:52 pm
living in downstate Peoria, we have an excellant health care provider community. I was an HMO person for my family thanks to the now defunct OSF Healthcar HMO which became Humana, but my review of BCBS providers indicates that NONE of my families docs, for me, my wife or pediatrician are participating. In fact, according to BCBS,there are less than a dozen docs from one group that ARE providers. And to top it all off, not only will the State have to pay more, so will I.

Comment by matt jones Thursday, Apr 14, 11 @ 5:06 pm
lincolnlovers,

I don’t blame the government workers (with the exception of the lazy and the corrupt) at all (except when they whine) for much of anything wrong with government. I just think there are too many of them to afford, not just now but ever. For that I blame the elected pinheads.

Comment by Cincinnatus Thursday, Apr 14, 11 @ 5:11 pm
Lets not forget that many state employees do not make as much as private sector employees. I wonder what the percentages of income an average state employee pays for healthcare vs. an average private sector employee. My thinking is that a private sector employee has more money to pay towards healthcare than a public sector employee.

Comment by Concerned Employee Thursday, Apr 14, 11 @ 5:18 pm
Lets also not forget that public employees also pay their share of taxes on top of the premiums and monthly “contributions” to help the state pay for health care coverage.

Comment by Concerned Employee Thursday, Apr 14, 11 @ 5:33 pm
–For that I blame the elected pinheads.–

Run for something then. The rote Fox News solutions and contempt for all who actually step up make you a natural in some circles.

Comment by wordslinger Thursday, Apr 14, 11 @ 6:09 pm
I have had HEALTHLINK for several years now. If your doctor is in their network, their benefits are just as good as HealthAlliance. The premium is only a little more each month. I have no idea what someone meant by additional contributions. I pay a monthly premium for myself and two dependents of about $209 monthly. So about $2500 a year. Pretty reasonable to me. Do I want it raised, no, of course not. But I want choice as to doctors, and we have one that is outside the network…. a $300 annual deductible and a little more each visit than the $15 co-pay. Well worth it. Presicription cost exactlly the same as HealthAlliance. Both Springfield hospitals are in-network for HEALTHLINK

Please quit overdramatizing this. Everyone will survive, even if they have to choose an OAP to get the doctors they want.

Comment by mythoughtis Thursday, Apr 14, 11 @ 6:12 pm
A word of caution to state workers who comment on this topic…the state pays more than $1400 per month per employee for family health care. It’s way more than most employees would ever imagine. So don’t expect much sympathy from non state employees. It’s a very expensive perk.

Comment by Budget Watcher Thursday, Apr 14, 11 @ 6:13 pm
C, lincolnlover was making a point that is too often ignored on here. As she said, you can’t do an apples and oranges comparison of salaries and benefits the state provides as an employer unless you compare it to other very large highly unionized employers (let’s say 25000 employees or more).

When you do that comparison, the fact that the state has a defined benefit pension plan is not at all unusual. The amounts employees pay for health insurance (around 16% of premium cost) is not low. Wages are not too high, and on and on.

I have raised that point several times over the past several years and generally people have ignored it, but it is valid. Wages and benefits at Joe Bob’s bait shack, or the corner convenience store, or the local dry-cleaners are not a valid comparison with GM and neither are they with the State.

Comment by steve schnorf Thursday, Apr 14, 11 @ 6:18 pm
however, an apples to oranges comparison shows how disparity the coverage can be between employees represented by public unions and much of the rest of the country.

Comment by Budget Watcher Thursday, Apr 14, 11 @ 6:27 pm
Mythoughtis, check out page 6/32 at this link. It shows what additional monthly contribution state employees must pay in addition to their monthly premiums. It is based on income level and type of health care coverage you have. If you make more money, your going to contribute more. If you choose the quality care plan, your going to contribute more. Open access plans are considered managed care as well under this.

http://www.state.il.us/cms/download/pdfs_benefits/FY11Seminar-StateBook-qxd.pdf

Comment by Concerned Employee Thursday, Apr 14, 11 @ 6:31 pm
BW, not just public unions, but also the non-public unions that represent workers at very large heavily unionized non-public employers. Some may wish our state workforce wasn’t unionized, but it isn’t going to change.

Comment by steve schnorf Thursday, Apr 14, 11 @ 6:59 pm
and by the way, the state doesn’t pay about $1400, the cost is about $1400. Employees pay a substantial portion of that cost, but arguably not as much as they might or should

Comment by steve schnorf Thursday, Apr 14, 11 @ 7:02 pm
I don’t know, Steve. My HMO tried nailing me with $900 more than what I am suppose to have paid. I did get $600 straightened out after a battle but I’m still not seen a dime back of the $300 I had to pay an ambulance. I got a choice of paying the $300 bill or having the service click their mouse and trash me with a report to credit bureau.

Comment by Cindy Lou Thursday, Apr 14, 11 @ 7:07 pm
Where is AFCME? No access to care in many rural counties.

Comment by Nun99 Thursday, Apr 14, 11 @ 7:16 pm
Steve, we’re pretty close to $1400 PMPM for state-subsidized family coverage. And I might add that’s non-taxed compensation. Mainly, however, I’d like to see state workers realize why others might see this as an exceptionally nice perk, and one that seems perhaps unfair to the majority who pay much more for lesser benefits.

I’m also not a public or non-public union detractor. They’ve negotiated benefits for their folks that we’d all like to get. But in a time when we’re all being asked to incur some painful cuts, union workers look more like the “haves” rather than the “have nots” especially to a political party that traditionally doesn’t give or get much love from unions.

Comment by Budget Watcher Thursday, Apr 14, 11 @ 7:37 pm
BW, I couldn’t agree more. Interestingly, I think most of the state’s unions appreciate the fact that their members have reasonably good working conditions, good pay, and good benefits. One, however, encourages its members to believe they are like depression-era coal miners in Appalachia, fighting the 12 hour work day and the company store. I’ve always thought that was a shame.

Comment by steve schnorf Thursday, Apr 14, 11 @ 9:31 pm
Having been successfully on the defending side of protested state bids over the years, if (as reported) they used different specs for the two types of plans, I wouldn’t want to have to try to defend this set of specs …

Comment by Retired Non-Union Guy Thursday, Apr 14, 11 @ 10:42 pm
Should have added I always tried to write specs that were of the “level playing field” type. Did have the politicos try to override them … and told them they could do that if they were willing to sign THEIR name to the changes.

As another comment, there used to be (and I assume still is, have read all the changes since 2002) a loophole the size of the Titanic in the procurement process buried way in the back of the standard RFP boilerplate in the fine print that allowed the Director of the procuring agency to throw out any and all bids and then award the contract(s) to whoever they wanted to by citing “the best interest of the state” … but they had to sign their name to that finding, creating an audit trail of responsibility which was something most directors would not do.

Comment by Retired Non-Union Guy Thursday, Apr 14, 11 @ 10:51 pm
meant to say “haven’t read”

Comment by Retired Non-Union Guy Thursday, Apr 14, 11 @ 10:52 pm
Steve Schnorf,

And I said that while the comparison to a large business may be appropriate, employees at those same large business do not represent the bulk of the workforce. The vast majority of workers in the US (if one excludes the government payroll which is the single largest employer in the US), and I suspect Illinois, work for small and medium sized business, or are self employed.

That being the case, I said that a state worker should remember that the vast majority of taxpayers do not have the same package of benefits/salaries/job security as a government worker, and should remember that when they whine about their lot in life.

Comment by Cincinnatus Friday, Apr 15, 11 @ 8:02 am
BCBS is the major power in the chicagoland market…their only growth can come from “downstate”…this is a BCBS-influenced effort to make more money, in cahoots with our elected officials.

Comment by healthydose Friday, Apr 15, 11 @ 8:53 am
Steve

what you call a contribution, I call a premium. Some companies call it cost-sharing. Whatever, the name, its a pretty reasonable cost these days for health insurance. Do you expect it to be free for you?

Comment by mythoughtis Friday, Apr 15, 11 @ 9:50 am