State to rebid part of contract to run state workers health plan

Georgia Community Health Commissioner Clyde Reese said Thursday that he would seek new bids on part of the lucrative state health benefits plan business after a major insurance company accused the agency of “rigging” the process.

Reese also said he would seek guidance from Attorney General Sam Olens in designing the bidding process.

» RELATED: Blue Cross in line to win state contract amid protests

“The Department of Community Health will be developing an alternative approach to solicit responses from vendors to provide health plan options within specified regions of the state,” Reese said.

The Atlanta Journal-Constitution reported Thursday that one of the companies currently managing the plan, UnitedHealthcare, is charging that the Department of Community Health staged a secret bid that cut United out of competing for the business. United’s current contract to help manage the plan — which provides care for about 650,000 teachers, state employees, retirees and family members — expires this year.

The company made the charge after DCH filed a “notice of intent” to award the contract to manage the plan to rival Blue Cross and Blue Shield of Georgia starting Jan.1. State officials said Blue Cross has projected it could save the state $500 million a year, in part by reducing payments to health care providers.

UnitedHealthcare has hired a legal team that includes Randy Evans, Gov. Nathan Deal’s campaign lawyer, former Georgia Attorney General Thurbert Baker, and former state Ethics Commission Chairman William H. Jordan, to press its case.

The state health benefits plan is big business. The state spends more than $3 billion a year covering medical costs for its workers and retirees, and it hires private companies to run the program. Currently both UnitedHealthcare and Cigna administer the plan.

The Department of Community Health opened up a competition for the new contract earlier this year. UnitedHealthcare was among the companies that presented proposals.

United’s protest, however, said the agency held separate bidding through a private contractor and only companies that had been invited and supplied with a password could go on the contractor’s website and bid, according to the protest.

DCH officials said the second request for proposals was for only part of the program’s contract — for additional health care vendors tied to specific areas of the state.

“I have determined that the process used in the second project was not properly inclusive,” Reese said in the statement.

But UnitedHealthcare wants the state to throw out the first bid and what it describes as the second, “secret” bid.

“We recognize Commissioner Reese has inherited a completely broken bid process and we appreciate his leadership in beginning to rectify the situation,” said Jordan, an Alston & Bird lawyer representing UnitedHealthcare in the case.

“However, putting on more lipstick doesn’t make the pig any less ugly, it just says you know it’s ugly,” he added. “This process was state-sponsored bid rigging. This last-minute decision by DCH to scuttle its secret bid merely confirms the entire bid process has been utterly, irredeemably flawed, and we will pursue our protest aggressively.”