State chooses Blue Cross to administer state employee health care

Governor Peter Shumlin praised Chittenden County State's Attorney T.J. Donovan's rapid intervention program at a press conference Tuesday. VTD Photo/Taylor Dobbs

Gov. Peter Shumlin with Chittenden County State’s Attorney T.J. Donovan at a press conference last year. VTD Photo/Taylor Dobbs

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.

Tom Brown

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17 Comments on "State chooses Blue Cross to administer state employee health care"

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Maggie York
2 years 8 months ago

I want to know what this new wellness program is – does it resemble this?
“What’s Science Got to Do With It?” | Blue Cross’s coercive “wellness” program http://ow.ly/o5Ots

Sandra Bettis
2 years 8 months ago

The fix has been in on this one for a long time. Talk about a monopoly….

John Halvey
2 years 5 months ago

Seems like a monopoly, all the way.
FAHC & BCBSVT

Why not have lawmakers have to buy at Health Connect?

Anne Donahue
2 years 8 months ago

BC/BS recently created a new subsidiary corporation[the Vermont Care Collaborative] that subcontracts mental health coverage for separate management and discriminatory pre-authorization requirements that are barriers to access to mental health care. The Brattleboro Retreat is the dubious “expert” partner in this new corporation. Even the American Psychiatric Association has written to protest this violation of federal and state parity laws.
State employees didn’t face these barriers under their current plan. I wonder if the new contract for state employees will force them, as it does now with other BC/BS subscribers, into second-class mental health coverage status.

Kristin Sohlstrom
2 years 8 months ago

Pay attention to Dave Bellini in this article. He is spot-on.

Vermont TAXPAYERS are the state’s largest employer, not IBM as parties would have you believe. Bellini’s concern about a sharp increase of premiums after this honeymoon period are not only valid, but it’s based on experience and WILL affect you and me.

Pam Ladds
2 years 8 months ago

I am currently insured with BCBCVT Catamount. This is the company that for the last 6 months of a program (it will be dropped in January) asked for 24.4% premium increase. They got 12.5%, and backdated it. In a discussion with BCBSVT their response was that for subsidized subscribers the increase would be picked up by the State. For those of us paying the full amount we were stuck with it. Win/win for BCBCVT. For the rest of us ………

Sandra Bettis
2 years 8 months ago

yes, i only heard bad things about catamount and good things about vhap. you know which one bcbs was running.

Craig Powers
2 years 8 months ago

@ Pam Ladds. Your posts always make it seem like BCBSVT is the bad guy in the room when it fact it was the VT legislature that mandated these changes to Catamount via the Obamacare exchanges. Instead of blaming only BCBSVT, she should take a long look in a mirror and accept the consequences of her vote for the folks who are mandating this disaster from the VT Statehouse. You getting exactly what you voted for.

Walter Carpenter
2 years 8 months ago

Many years ago I had two medical procedures within a year apart of one another. One was a gallbladder taken out; the other a colonoscopy. The gallbladder was first: $50 co-pay. The colonoscopy came in with a surprise co-pay of $250.00, which bcbs neglected to tell me about. They cited “increased costs,,” as their reasoning. I told them that my wages do not rise to meet their costs. Same policy through an ex-employer. They basically told me that, while sympathetic, it was my problem and not theirs. I’ve never forgotten that lesson. Some years later they paid their ceo a… Read more »

Pam Ladds
2 years 8 months ago

“She” did! All 2 of my posts do indeed imply that BCBSVT is the “bad” guy on the cost issue. BCBSVT is the company that asked for and got a massive increase in premiums for the last few months of a program. I have no issue with the demise of the Catamount program, hopefully what replaces it will be better. At east more people will be covered. Do I think insurance companies belong in the business of health care, which is a separate issue and question? No I don’t! Do I think we should have Universal Health Care? Absolutely.

Dave Bellini
2 years 8 months ago

Interesting…. BCBS is going to save the state 5 million dollars? It costs around 5 million dollars right now for Cigna to administer the state employees health plan. Apparently, Blue Cross will now do this work for FREE. What is really going on here is political spin and weasel-wordsmithing. The wellness program that both the state and Blue Cross mention is UNDEFINED, of course. The 5 million in savings may be “projected savings” or “goal savings” or a massively unrealistic projection that a new wellness plan will magically result in obese folks suddenly attaining their ideal weight. Smokers will all… Read more »

Maggie York
2 years 8 months ago

Yes, Dave, I agree, especially about the cost-shifting onto state employees. Did you read the article I posted above? BCBS is charging higher premiums if you don’t “voluntarily” submit to their wellness programs.

I would hope we are protected from this by our union contract, but I have my doubts…

Sandra Bettis
2 years 8 months ago

If the VSEA were a union, they might have a little more bite.

Dave Bellini
2 years 8 months ago

Yes Maggie, I read the article you posted and am not surprised by the “all stick” and “no carrot” approach. State employees are protected by a contract. Negotiations will begin very soon, what a coincidence! I fully expect the Administration will attempt to cost shift health care expenses onto the backs of workers. Why break with tradition? It’s likely they will attempt to mandate participation in BCBS wellness and charge more money to folks that are overweight, smoke, have a substance abuse problem or don’t follow wellness protocol. I’m worried retirees in their 80’s and 90’s will be forced into… Read more »

Tony Redington
2 years 8 months ago

Giving Express Scripts a pass just continues a relationship whose costs are a black box. The State would be better off negotiating a simple cost/plus contract with Express Scripts with all the prices paid fully transparent. Same with BC/BS. All the State contracts for services need to be fully examined by audit

Finally, the State employees continue to lack disability insurance while the bosses–like the Governor-receive coverage. Maine has a union run system and this needs to be explored as the bosses continue their policy of benign neglect.

Rachael Fields
2 years 8 months ago

As a state employee and a healthcare worker, this switch is very concerning to me. At a time when quality healthcare is unaffordable to most Americans, Vermont is switching to a provider who has a bad track record with those whom it has insured, with no definitive reward except some trumped up promises of cost savings. Been there before… And the big win… Wellness programs- so they wil help you quit smoking and decrease your burden on the healthcare cost, but increase your premiums and probably your copays so much that you won’t be able to afford to go to… Read more »

Dave Bellini
1 year 10 months ago

UPDATE ****** UPDATE ***** UPDATE 1st quarter CY 2013 total plan expenses: $32,380,912 – with Cigna . 1st quarter CT2014 total plan expenses: $37,567,930 – with Blue Cross . So, where are the “savings” ??? It’s not optimal to make predictions based on one quarter but a 16% INCREASE from the same quarter last year isn’t “SAVINGS.” The state refused to reveal their math last August when the administration was boasting about “10 million in savings.” We’ll know more next quarter because now I’m really curious how we’re going to save 10 million if we’re already up 5 million in… Read more »

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