The state is switching health care administrators for more than 23,000 state employees and dependents. Cost savings, a new wellness model and a philosophical alignment with state policy were behind the decision, officials said Wednesday.
Gov. Peter Shumlin announced that Blue Cross Blue Shield of Vermont will replace Cigna as the administrator of services for state employees, beginning Jan. 1. The change applies to medical claims only.
Express Scripts will remain as the state’s prescription drug provider and Northeast Delta Dental will continue to manage dental claims, Shumlin said in a news release.
Shumlin said the change would save the state $10 million annually across all three areas of health coverage. Vermont State Employees’ Association representatives are skeptical.
A key factor in the selection of Blue Cross from a competitive bidding process that included Cigna, MVP Health Care and others, was Blue Cross’s new Accountable Blue wellness plan and the company’s endorsement of the state’s Blueprint for Health reform effort, Human Resources Commissioner Kate Duffy said.
“Blue Cross had the most attractive overall cost, wellness plan and commitment to the Blueprint.”
Kate Duffy, commissioner of Human Resources
“They were all very financially competitive bids with financial improvements over last year,” Duffy said. “With Blue Cross, the state shares Blue Cross Blue Shield’s philosophical approach to containing health care costs by affecting behavior.”
All of the plans that were considered offer state workers the same level of coverage, which is negotiated through collective bargaining between the administration and the union, she said.
The new Accountable Blue wellness program offers education and assistance with smoking cessation and other behaviors that increase health care costs, Shumlin said.
“We know that the best way to contain health care costs is to help people change risk factors like smoking and obesity that contribute to bad health outcomes,” Shumlin said. “I am confident Blue Cross’ new Accountable Blue program will help us save costs, and more importantly, improve the health of our state employees and their families.”
Officials at the VSEA, the union representing state workers, expressed doubts about the governor’s claim of $10 million in annual savings. The union supported Cigna’s continued service, VSEA director Mark Mitchell said.
Mitchell deferred comment to Dave Bellini, a VSEA board member and chair of the union’s benefit advisory committee.
“I’ll believe it when I see it,” Bellini said of the proposed savings. “How much cheaper was Blue Cross’ bid? Did we see it in writing?”
Bellini said the state switched from Blue Cross to Cigna (around 2000) due to double-digit rate increases from Blue Cross.
“Our concern is are we going to see large premium increases?” Bellini said. “And if our increases are going to be higher than average, why would you change?”
Duffy said Blue Cross promised to secure discounts from service providers and backed that up with a monetary guarantee in the event discounts are not delivered. All of the bidders offered a certain percentage in discounts and a certain level of guarantee, Duffy said. She would not disclose Blue Cross’ administrative services bid for medical claims or the discounts promised, citing competitive reasons for the insurance companies.
“We think that (the level of Blue Cross’ guarantee) shows how confident they are that they can deliver,” she said, adding that Cigna was willing to give a financial commitment “but not at the same magnitude.”
Bellini questioned whether the choice of Blue Cross was political and said relations between the union and the Shumlin administration have been tense.
“When we switched to Cigna, we were full partners with (then-Gov. Howard) Dean,” Bellini said. “We don’t have that anymore. I think the biggest factor is they want Blue Cross to be the single-payer administrator because they’re in-state.” (Cigna is based in Connecticut.)
Duffy said $5 million of the $10 million in proposed savings is from Blue Cross, about $5 million is from Express Scripts, and the rest from Delta Dental. She said the savings were estimated by running last year’s claims through each administrator’s proposal.
“The financial component is one part of the overall package,” Duffy said. “Blue Cross had the most attractive overall cost, wellness plan and commitment to the Blueprint.”
Contact Tom Brown at [email protected] and follow him on Twitter @TomBrownVTD.