GA’s Largest Health Insurer Expands Reach With Lucrative State Contract

The patient group will add to Blue Cross’s market-leading two million members statewide.

DCH commissioner Clyde Reese expects the new contract to cut down on employee premiums and increase access to providers.

“With someone having a very strong market presence we make sure our members have, all across the state, access to providers they want and the capacity is there to serve our members,” said Reece.

He estimated the new contract will secure savings for the state of up to $200 million per year.

Overall, Blue Cross will administer about $3 billion in new claims. Company President Morgan Kendrick stressed the advantage of its large network.

“We are in just about every single county of the state in a real material way and in all business segments,” said Kendrick. ”The density and breadth of the network is something that is a tremendous value.”

UnitedHealthcare, which currently administers 90 percent of the state employee plan, has attempted to stop the contract from being finalized. The company, along with CIGNA, is challenging the bidding process in court, saying it was rigged in favor of Blue Cross.

Kendrick, however, said Blue Cross won the contract fairly.

“In a very open and transparent manner we responded to everything based upon the procurement rules set forth during the time of the bid and negotiation,” said Kendrick.

In a written statement, UnitedHealthcare spokeswoman Tracey Lampner called Friday’s contract announcement “unfortunate,” and said the state health insurance market was becoming less competitive.

Jimmy Lewis, CEO of HomeTown Health, a state association of rural hospitals, worries the Blue Cross contract will give the company even more leverage to lower rates on doctors and hospitals, particularly in rural areas.

“These small hospitals are not going to have a cushion. They’re already facing dire straits and they’re going to face much worse straits as we see these impacts come down the pipe,” said Lewis.

Blue Cross’ Kendrick said it’s not company policy to underpay providers. He added Blue Cross is committed to working collaboratively with hospitals and doctors to lower costs and improve quality of care.

Meanwhile, Commissioner Reese said measures have been taken to ensure fairness.

“We insisted on a contract provision that would prohibit Blue Cross from requiring providers or people to buy their other products in order to be in the network for the State Health Benefit Plan so we think that mitigates some things that some may be concerned about,” said Reese.

Under Blue Cross, state employees will have the option of a bronze, silver, or gold plan – similar to the tiers of policies in the upcoming health insurance exchange. All options provide a PPO plan, with a health reimbursement account attached. DCH officials said most employees selecting the bronze and silver plans will see reduced premiums.

The DCH board approved the design plan by 5-3 vote Thursday. 

Before the vote, Reese said DCH would rebid a regional vendor contract for the metro Atlanta area. He said the initial process was “not properly inclusive.” Those covered in metro Atlanta make up about 10 percent of the state employee health plan.

Board member Jamie Pennington, who ultimately voted “no” to the overall design plan, said she opposed the idea of state employees in one area having different options than those in another area.