Regence Sues Over Losing State Employee Contract

Regence refutes that Providence earns better marks

July 31, 2009 -- Regence BlueCross BlueShield of Oregon refuses to accept defeat. The insurance giant has filed a lawsuit against the state of Oregon after losing a multi-million dollar contract to its competitor, Providence Health Plans.

“They’re protesting the process,” said Ben Unger, a special assistant to the Attorney General. “It could throw everything into disarray. It’s hard to predict what will happen.”
On April 21, the Public Employees Benefit Board rejected Regence’s bid to insure 102,507 state employees and their dependents for the next two years – bringing to a close Regence’s 20-year history with the state. Providence was chosen as the state’s single statewide PPO.  Open enrollment is scheduled to begin in early October.
However, Regence is trying to prevent state officials from signing the contract with Providence. Its lawsuit was filed on July 15 in Multnomah County Circuit Court using the Administrative Procedures Act. Represented by Stoel Rives LLP, its attorneys claim that officials did not follow appropriate procedures during the bidding process.
A hearing will be held in early August, according to Unger. However Regence may have a difficult time convincing the judge to overturn PEBB’s decision because it never challenged the contractual process and submitted a bid request.
PEBB’s decision came down to which health plan could fulfill its vision to improve patient outcomes and quality. “We’re changing our culture, and Providence is ahead,” said Diane Lovell, a PEBB board member at the April meeting.
Money played a minor role in the decision. The proposals by Regence and Providence differed by a slight margin, $2.1 million. Regence had asked for $31.81 million to administer the PPO over the next two years, while Providence’s offer was $29.71 million.
After the decision, Regence filed a protest with PEBB’s board, however did not gain any traction.
Regence lost another multi-million contract last year when the Oregon Educators Benefit Board chose The ODS Companies and Providence Health Plans to insure its 145,000 school teachers.
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PEBB board member Diane Lovell's comment deserves strong emphasis here. The pattern of lost large group business for Regence since about 2001, when its current CEO became Oregon president and shortly after that, Regence Group CEO, is distinct. I submit that Ms. Lovell's comment reflects her own belief about the non-responsiveness of our largest commercial carrier to the preferences of large groups like PEBB for quality, patient safety and quality-related cost-reduction strategies--as opposed to benefit "innovations" like high deductibles and coinsurance with or without health savings accounts--the vaunted "skin in the game" strategy for patients. If you listen carefully to her comment, you could draw the conclusion that Regence lost PEBB fair and square.