Blue Cross wins bid to take over R.I. state employee health coverage

Providence Journal (RI)

PROVIDENCE -- Competitive bidding has convinced the Raimondo administration to switch more than $560 million worth of state employee and retiree health insurance from UnitedHealthcare to Blue Cross & Blue Shield of Rhode Island on Jan. 1.

For the projections to work, employee medical claims would have to drop to a level the state has not seen in at least five years. The rationale is not yet clear.

Announcing the "tentative selection," Department of Administration Director Michael DiBiase said: "We are looking forward to working with Blue Cross/Blue Shield of Rhode Island and ensuring a seamless transition for our state employees and non-Medicare-eligible retirees. ... We are also pleased to renew our contract with CVS Caremark, which has overseen our pharmacy benefits program for many years.

"Both companies have deep ties to the community and will provide significant value to our members and to the taxpayers of Rhode Island."

It is unclear if there will be any changes in the amounts they employees are required to pay every two weeks for medical, dental and vision care coverage, according to Department of Administration spokeswoman Brenna McCabe.

She said the required biweekly payments, by the employees, will be set in the fall.

The employee rates now range from $54.76 every two weeks for individual coverage to $206.80 for top-scale employees opting for the most expensive family plan the state offers. But the overall plan design -- including the hospital and office visit copays and deductibles, and the range of services covered -- will remain the same, McCabe said.

The state is still self-insured, which means it pays an administrative fee to the health insurer and full medical claims.

For the state, year-to-year increases in medical claims and administrative costs are anticipated to go from $177.1 million in calendar year 2020 to $187.4 million in 2021 and $198.5 million in 2022.

The state paid more this past year -- a total of $189.6 million in claims and administrative fees in the fiscal year that ended on June 30 -- then it expects to pay in 2020.

That included $183.4 million in medical claims alone, which is a variable number that goes up and down each year, plus $6.2 million in administrative fees.

It was not yet clear why the state, in its analysis, assumed employee medical claims alone would drop from $183 million in FY 2019 to $173 million in 2020, as reflected in the cost projections for Blue Cross & Blue Shield.

Four companies bid on the massive state contract to provide health insurance to approximately 17,000 full- and part-time employees and non-Medicare-eligible retirees: United, which has been the state's medical plan administrator since 2005, and competitors Blue Cross & Blue Shield, Tufts and Aetna.

Based on three-year cost projections, Blue Cross was the low-bidder at $562,979,000, compared to $574,430,000 by United, $598,929,000 by Tufts, and $653,285,000 by Aetna.

The initial contract period is slated to span over three years, beginning Jan. 1. Contracts may be renewed for up to two additional 12-month periods based on vendor performance and the availability of funds.

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