Blue Cross & Blue Shield of Rhode Island is fighting to keep the roughly 44,000 state employees, retirees and dependents it covers, saying that despite Gov. Donald Carcieri’s belief to the contrary, its bid for the state contract for 2005-07 was actually lower than UnitedHealthcare of New England’s.
How far Blue Cross is going to get, however, is unclear. Carcieri spokesman Jeff Neal said the governor would be sending out a letter late last week, but the gist of his position is that there’s no more to discuss here.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
“The governor is confident that we went through a very thorough, very fair process in judging the two bids, and the results were clear,” Neal said.
Blue Cross now has an exclusive contract to run state employees’ health benefits, but it ends Dec. 31, and this month Carcieri announced that United would be taking over in the new year, having outbid Blue Cross by about $8 million for a deal worth an estimated $674 million, including $23.5 million in administrative fees.
Neal said Blue Cross’ bid was $6 million higher on administrative fees, and another $2 million on pharmaceutical benefits. The actual services and coverage to be provided by United are the same as Blue Cross now offers, Neal said.
But in an Oct. 15 letter to Carcieri, James E. Purcell, acting president and CEO of Blue Cross, argued vehemently that in fact, United isn’t offering the same package, and in any case its bid, when compared in detail with Blue Cross’s, was inferior.
On Thursday, after Carcieri dismissed the company’s arguments, Blue Cross followed up with a formal bid protest, a 10-page legal document alleging that the bid award was, among other things, “clearly erroneous, arbitrary and capricious.”
If the state had truly compared both companies’ bids on equal terms, the protest argues, Blue Cross would have come up over $2 million lower than United – not counting an expected $3.5 million in savings from Blue Cross’s offer not to pass on the cost of higher physician reimbursement rates until after July 31.
The only reason United came out ahead, Blue Cross’s lawyers argued, was that the state allowed it to offer a package that didn’t fully match what the bid requested, excluding at least two items that Blue Cross thought were required.
