Bart McMullan Appeals to PEBB

May 21, 2009 -- After losing a multi-million dollar contract it’s held for over 20 years, Regence BlueCross BlueShield is fighting back. It’s trying to persuade officials that they made a serious mistake by choosing their competitor, Providence Health Plans, as the statewide PPO for 102,507 public employees and their dependents. 

On May 1, Regence sent a formal protest letter, however the Public Employees’ Benefit Board has not yet responded and is awaiting legal counsel.

But that didn’t stop Regence’s president from testifying at the board’s May 19 meeting. After waiting nearly four hours, Dr. Bart McMullan, Jr., emphasized Regence’s major strengths – its provider network, pharmacy benefits system, claims experience and customer service.   The board’s decision, he said, was based on incomplete and inaccurate information without supporting documentation, and “the financial impact to our state could be significant.”   McMullan pointed out that Providence’s proposal was based on “networks and network discounts not yet in place. Even if Providence is ultimately able to negotiate agreement with these non-contracted providers, the level of discount they will be able to achieve is unknown, and costs will almost certainly be higher.”   Regence estimates it has a $10 million network advantage in panel savings. “We are so confident in our ability to deliver network savings we included a $3 million performance guarantee in our proposal,” he said. This information was overlooked in the analysis by the Mercer consultants.      Regence’s claims experience is also superior and represents 80 percent of PEBB members. With that data, the health plan can predict claim costs based on actual experience. “Even a small error based on incorrect assumptions can result in millions of dollars of unanticipated claims costs for PEBB and the state,” he said.     McMullan also questioned Providence’s ability to manage a statewide program since it only has a single medical group in the Portland metropolitan area, and must negotiate with competitors in other regions. “Not partners as is the case with Regence,” he  insisted. “Providence’s efforts outside their own system will have to be viewed as pilot programs. They cannot guarantee success in these efforts.”   After thanking him, board members declined to respond to McMullan’s comments.

OHSU Up for Grabs 

Without Regence in the picture, university employees may no longer have access to Oregon Health & Science University’s network. “OHSU is critical to our mission,” said Denise Yunker, human resources director for the Oregon University System. “With the loss of funding to OHSU, the impact will be felt by our state, our students and our taxpayers.”   OHSU runs nursing education sites on three campuses -- Eastern Oregon University, Southern Oregon University and the Oregon Institute of Technology – and a student health center at Eastern. A joint economic development project for medical research is also under way on OHSU’s waterfront campus.   “If you exclude OHSU it will hurt our affiliate and hurt us and our members,” said Yunker, who praised the board for deciding to become self-insured.      

Now there’s much more network flexibility, said Rocky King, a board member. “If OHSU isn’t part of Providence’s network, we need to contract with them.”

See our related stories about Regence by clicking here.