The Jindal administration announced late Friday that it wants Blue Cross/Blue Shield to have the job of managing state employee health plans.
Blue Cross/Blue Shield was the lowest bidder, offering to do the work cheaper than Humana and United Healthcare, beginning Jan. 31.
The hiring could lead to the loss of more than 150 state government jobs, ending the long-standing practice of state employees handling health plans for the state workforce, retirees and dependents. Neither the layoffs nor the contract can occur without the Civil Service Commission’s approval.
Michael DiResto, spokesman for the Division of Administration, said Blue Cross/Blue Shield stands to receive $37.8 million a year to serve as an administrator.
Blue Cross/Blue Shield contributed $2,500 to Jindal’s gubernatorial campaign in 2007.
The company would pick up the Office of Group Benefits’ PPO plan and continue handling the HMO. DiResto did not respond to queries about how much Blue Cross/BlueShield is receiving to administer the state’s health maintenance organization, or HMO.
Humana wanted $49.1 million a year and United Healthcare sought $40.3 million, DiResto said.
He said he did not have a copy of the proposal that Blue Cross/Blue Shield submitted to the Jindal administration.
DiResto said compensation to Blue Cross/Blue Shield will be based on the number of enrollees, which fluctuates monthly. He said the $37.8 million is based on a snapshot in time.
The PPO, or preferred provider organization, currently is managed by state workers at the Office of Group Benefits. The PPO, which covers 62,010 insured lives, is a group of doctors, hospitals and others providing health care at reduced rates.
The HMO places patients under the care of a primary care physician and covers 164,765 insured lives.
The Jindal administration contends that hiring a private company to manage the health plans would save the state more than $20 million a year, largely because of the layoffs. Eliminating 177 positions would leave roughly 150 jobs at the Office of Group Benefits, which provides health and life insurance to about a quarter-million current and retired state employees and their dependents.
“The selection of a third-party administrator is an important step toward providing quality care and service to plan members in the most cost-effective way,” Commissioner of Administration Paul Rainwater, the governor’s chief budget adviser, said in a prepared statement.
James Lee, president of the Office of Group Benefits’ board, lamented losing control over state employee health plans.
He said the only plus is that the Jindal administration chose Blue Cross/Blue Shield.
“It’s the lesser of two evils,” Lee said. “I have a feeling Blue Cross can handle it. They do an adequate job now.”
He said the Jindal administration did not consult the board about the hiring. He said Rainwater also ignored requests to attend board meetings.
“It would be nice to be asked. I’ve only been doing this for 20 years,” Lee said.
The Jindal administration’s decision to shift away from state employees handling health plans sparked controversy, primarily because the Office of Group Benefits accumulated a sizable fund balance under the current management scheme.
Initially, the administration explored selling the Office of Group Benefits’ book of business and hired Morgan Keegan as an adviser on the transaction.
The administration dropped the sale amid concerns that premiums would rise and benefits would shrink. Instead, the administration opted to hire a third party administrator.
DiResto said proposals were reviewed based on qualifications, customer service plans, provider plans, provider access, coverage costs and administrative fees.