In a flurry of legal maneuvering, a judge has rejected UnitedHealthcare of Florida’s challenge to major changes in the state employee health-insurance program — while two other HMOs dropped their cases.
United responded to the judge’s ruling by filing an emergency petition with the 1st District Court of Appeal, as the insurer seeks to block changes that would lead to thousands of its state customers shifting to other health plans.
Coventry Health Care of Florida and Florida Health Care Plans also had sought to block the changes but dismissed their cases. Kris Purcell, a spokesman for the state Department of Management Services, said those companies were in settlement negotiations with the state.
“There’s no done deal yet, so they’re still working on it,” Purcell said early Monday evening.
The overhaul, which the state announced this summer as a cost-saving move, called for only one HMO to serve state employees in each county. But United — the biggest loser under the plan — fought the changes in the state Division of Administrative Hearings.
In part, United argues the process of awarding contracts was flawed because it did not consider discounts that the huge insurer can squeeze from health providers. United spokeswoman Elizabeth Calzadilla-Fiallo said the company plans to continue its legal challenge.
“We really do believe in the merits of our protest, all points made in that protest,” she said.
United, Coventry and Florida Health Care Plans were scheduled to start a week-long hearing Monday in the Division of Administrative Hearings. But Administrative Law Judge Barbara Staros short-circuited the hearing Friday by tossing out the United case.
Coventry and Florida Health Care Plan followed by voluntarily dismissing their cases, according to filings dated Saturday. Attorneys for those companies did not return phone calls Monday.
Staros ruled that United had not properly complied with a legal requirement that companies post bonds when they challenge state-agency decisions. As a result, she sent the United protest back to the Department of Management Services for dismissal.
With hundreds of millions of dollars in contracts at stake, the changes in the state-employee health system touched off a battle in the HMO industry. As an indication, AvMed and Capital Health Plan — two winners in the new system — intervened in the legal challenges on the side of the Department of Management Services.
DMS contends that changing the system will lead to an estimated savings of $400 million over two years, in part because of competition for the contracts.
The changes, which are slated to take effect Jan. 1, apply only to employees enrolled in the HMO portion of the state insurance program. Employees enrolled in the state’s preferred-provider organization plan (PPO), which is administered by Blue Cross and Blue Shield of Florida, are not affected.
Currently, the state contracts with five HMOs. But under the plan announced this summer, each county would have one HMO for state employees — a change that would require many employees and family members to change health plans.
With the behind-the-scenes negotiations taking place Monday, it was unclear whether the plan will change. But one possibility would be to allow more than one HMO in some counties.
Under the original version, AvMed would become the dominant HMO in the state program, winning contracts to serve 38 counties, including major population centers such as Miami-Dade, Broward, Palm Beach, Duval, Hillsborough, Pinellas and Orange.
Capital Health Plan would get the contracts in Leon County and six nearby counties that are loaded with state workers and retirees.
In contrast, United would go from providing coverage in 66 counties to 18. Coventry would get four counties, while Florida Health Care Plans would be shut out in the only two counties it serves — Volusia and Flagler.
In its emergency petition to the 1st DCA, United disputed Staros’ ruling that it had failed to properly post a bond.
But in the bigger picture, the insurer disputes the DMS conclusions in awarding the contracts. United contends that its discounts with health providers could save the state as much as $400 million, when compared to other companies.
Purcell, however, said United is ignoring various other factors that went into the contract awards.
“We’re saying, that’s only one piece to a much-bigger pie here,” he said.
By Jim Saunders
