State HMO Contracts Spur Challenges

May 24, 2017

An administrative law judge will hear arguments next month as three health insurers challenge the way state officials want to divvy up contracts for HMO coverage for state employees.

United HealthCare Services, Inc., Aetna Life Insurance Co. and AvMed, Inc. filed the challenges after the state Department of Management Services last month released a plan to award contracts to insurers in counties across the state.

United HealthCare, Aetna and AvMed would each receive contracts but argue that they should get business in more counties — or even statewide. The cases were sent last week to the state Division of Administrative Hearings, where Judge Lawrence Stevenson has scheduled a multi-day hearing to start June 14.

United HealthCare, for example, argued in its challenge that it would provide the “best value” for the state and employees.

“It is United's position that DMS acted contrary to competition in making a county by county award decision when it is the best value to allow the potential vendors to compete on a statewide basis, allowing state employees, families and state retirees to make informed choices about their health care,” the insurer's challenge said. “Even if DMS was correct in awarding by county, the award is still not reflective of the best value in those counties.”

The department said in filings that it provided opportunities May 2 to resolve the challenges but was unable to reach agreement with the companies.

Capital Health Plan, which is slated to receive contracts in Leon County and six surrounding counties, has intervened on the side of the state agency.

“The ultimate facts alleged by CHP (Capital Health Plan) are that CHP' s final offer provides by a wide margin the best value to the state in each county in CHP' s service area, as determined by the department reasonably and in good faith during the negotiation process,” the Tallahassee-based insurer said in its request to intervene.

The contracting process, which involved what is known as an invitation to negotiate, started last fall and led to the Department of Management Services in April issuing a notice about where it intended to award contracts to each company, according to documents filed in the cases.

The notice shows that Aetna would receive contracts in 31 counties; United HealthCare would receive contracts in 16 counties; AvMed would receive contracts in 11 counties; Capital Health Plan would receive contracts in seven counties; and Florida Health Care Plans would receive contracts in two counties.