Nebraska drops BCBS as state health insurance provider
Blue Cross Blue Shield of Nebraska is challenging the state's decision to switch insurance companies for state employees to UnitedHealthcare - a decision worth $184 million annually.
On Feb. 15, the state announced that it is awarding UnitedHealthcare with a contract to administer a health plan for state employees, which will take effect July, 1 2012.
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"We made this decision because United is going to save us a significant amount of money each year," said Department of Administrative Services Director Carlos Castillo. "It's about five percent, $8 million a year on average. We also looked into comparing some of the programs each company could provide to us to help make a decision to switch."
The roughly $180 million contract provides coverage for about 15,000 state employees, or 30,000 people when spouses and dependents are included.
However, Blue Cross is disputing the state's cost analysis. The company said that by switching to UnitedHealthcare, Nebraska actually would incur an additional $10 million annually due to the limitations of the United provider network and other factors the state failed to consider, according to Andy Williams, the director of corporate communications for Blue Cross Blue Shield of Nebraska.
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In its proposal to the State, UnitedHealthcare excluded all healthcare claims in excess of $75,000 and mental health/substance abuse claims from its discount guarantees, said Williams.
"We are disappointed with the state's decision and believe this will cost taxpayers more, not less. Additionally, this will ultimately result in exporting jobs and tax revenue out of Nebraska," said Brian Pickering, vice president of communications for Blue Cross Blue Shield, in a press release.
Williams said Nebraska administrators also contend that state employees will obtain expanded prescription drug coverage with the change.
"The state of Nebraska contracted with an independent company - Express Scripts - for prescription drug coverage. Blue Cross did not provide prescription drug coverage administration for the state," said Williams.
"We are simply asking the state of Nebraska to reconsider their decision and use industry standards for making a decision of this magnitude that impacts all Nebraskans," said Pickering in a press release.
"It's pretty typical for a health insurance provider working with a contract of this size – especially since they have been our provider for at least 25 years – to want to challenge a decision like this," said Castillo.
According to Castillo, UnitedHealthcare has established a large network in Nebraska, similar to Blue Cross/Blue Shield, so most employees will see no disruption in their services.
"We feel confident with our decision at this point," he said.
The State Department of Administrative Services conducted an open bidding process to award the new insurance contract and Blue Cross Blue Shield received a fair shake in the bidding process, according to Castillo. That included allowing companies to submit a best and final offer after they had seen proposals from the competition.
Castillo said Blue Cross had until Feb. 27 to file a protest.
"Once the protest is filed, we'll schedule a time for them to come in and make their case – which could include them attempting to rebid," he said.
[Also: BCBS of Nebraska recovers financial strength, credit rating]
