Arkansas lawmakers approve contract with United Healthcare in bid to cut insurance costs
Arkansas lawmakers and officials from the Employee Benefits Division are reviewing the state’s health insurance plan for retired employees and public school employees. A negotiated contract between the benefits division and United Healthcare was approved Wednesday by a legislative subcommittee that oversees the division.
Jake Bleed, director of the employee benefits division, said United Healthcare was one of three companies to apply for the state’s offer. He says that after winning the bidding process, which must follow state laws, the division was able to negotiate a contract it was happy with.
“We really reinforced some of the performance guarantees and some of the other aspects of the contract to make sure that the supplier we selected was really held to a high standard and was going to be accountable to the needs of our members and the expectations of the Assembly. general,” Bleed said.
Thanks to United, the state will now be able to offer retired employees Medicare Advantage Plus, instead of Medicare only. Bleed says traditional health insurance pays the first 80% of claims, while the state pays the other 20, in addition to paying member liability. With Medicare Advantage Plus, United is responsible for liability, which Bleed says will encourage the company to keep risk low to reduce costs.
Linda Jones, chief customer officer of United Healthcare, said Traditional Medicare is concerned about paying claims for members, while Medicare Advantage Plus must also be concerned about members’ health.
“We will now take responsibility for helping retirees live healthier lives. We will be implementing clinical programs in addition to the value-added services we have added,” Jones said.
Bleed said having Medicare Advantage Plus through United Healthcare could help the state save money, while maintaining the same benefits.
“We negotiated with them [United] a gain-sharing agreement where they have to report how much money they spend on benefits,” Bleed said. “If they keep too much, they pay us back. I think we have very good safeguards to ensure that savings do not result in less benefit for our members.
Bleed added that the federal government provides subsidies to United and that will also play a role in helping to save money.
Many lawmakers said voters told them about their concerns about how registration would work. Representative Stephen Meeks, R-Greenbrier, said he has received email questions asking if retirees will be able to stay on their current plan if they wish. Bleed assured lawmakers that retirees will be able to decide which coverage they prefer.
“Medicaid-eligible retirees will be automatically enrolled in the Medicare Advantage plan. They will then have the possibility from August or September and until November 30 to make their decision. Then they can pay the corresponding rates, they can do that, or they can switch to the Medicare Advantage plan,” Bleed said.
Lawmakers voted unanimously to approve the contract if it is deemed legal. Mitch Rouse, director of the Office of State Procurement, said a objection against United was filed by healthcare company Benistar.
Rouse explained to lawmakers that the contract should be halted until the objection is proven unfounded. Rouse said Benister filed the objection arguing he shouldn’t have been disqualified.
“The RFP requires any supplier to be a 4 star supplier or better, Benister is not a 4 star supplier,” Rouse said of the disqualification.
According to the Centers for Medicare & Medicaid Services (CMS), United had an overall rating of four stars.
Lawmakers have granted the committee co-chairmen the power to move forward with United’s contract if the objection is overruled. A clear timeline was not given for how long a review might take for the objection.