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Arkansas lawmakers approve contract in attempt to lower insurance costs

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Ronak Patel
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KUAR News
Director of Employee Benefits Division Jake Bleed explains to law makers the benefits that United Healthcare offers.

Arkansas lawmakers and officials from the Employee Benefits Division are revisiting the state’s health insurance plan for retired employees and public school employees. A contract negotiated between the Employee 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 bid by the state. He says after winning the bidding process, which has to follow state laws, the division was able to negotiate a contract they were satisfied with.

“We really strengthened some of the performance guarantees and some of the other aspects of the contract to make sure the vendor we selected was really held to a high standard, and was going to be responsible to the needs of our members and to the expectations of the General Assembly,” Bleed said.

Through United, the state will now be able to offer retired employees Medicare Advantage Plus, instead of only Medicare. Bleed says traditional Medicare pays for the first 80% of claims, while the state pays the remaining 20, in addition to paying for liability for members. With Medicare Advantage Plus, United is responsible for liability, which Bleed says will incentivize the company to keep risk low to lower its cost.

Linda Jones, chief client officer for United Healthcare, said traditional Medicare worries about paying claims for members, while Medicare Advantage Plus has to also worry about the health of members.

“We will now take on the responsibility of helping the retirees live healthier lives. We will put clinical programs in place in addition to the value added services that we have added,” Jones said.

Bleed said having Medicare Advantage Plus through United Healthcare could help the state save money, while keeping the same benefits.

“We have negotiated with them [United] a gain-share agreement where they have to report how much money they spend on benefits,” Bleed said. “If they keep too much, they pay it back to us. I think we have really good guardrails to make sure that the savings don’t result in less benefits for our members.”

Bleed added the federal government provides United with subsidies and that will also play a role in helping save money.

Many legislators said that constituents are coming to them about concerns on how enrollment will work. Rep. Stephen Meeks, R- Greenbrier, said he’s been emailed questions asking whether retirees will get to stay on their current plan if they want to. 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 opportunity beginning in August or September and running through Nov. 30 to make their decision. Then they can pay the accompanying rates, they can do that or they can roll over to the Medicare Advantage Plan,” Bleed said.

Lawmakers unanimously voted to approve the contract if it is found lawful. Mitch Rouse, director of the Office of State Procurement, said an objection against United has been filed by health care company Benistar.

Rouse explained to lawmakers the contract has to be halted until the objection is proven without merit. Rouse said Benister filed the objection arguing it shouldn’t have been disqualified.

“The RFP requires that any vendor be a 4 star or more vendor, Benister is not a 4 star vendor,” Rouse said when asked about the disqualification.

According to the Centers for Medicare & Medicaid Services (CMS), United had an overall rating of four stars.

Lawmakers granted co-chairs of the committee the authority to move forward with United’s contract if the objection is thrown out. A clear timeline wasn’t given for how long a review could take for the objection.

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