Anthem files ‘intent to bid’ for Dirigo Insurer only known suitor to administer state health plan

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Only one of five insurance companies that expressed an interest in submitting bids to provide coverage through Maine’s Dirigo Health Program has filed an “intent to bid” notice with the state.

And that firm – Anthem Blue Cross and Blue Shield of Maine – isn’t sure it will follow through with an actual bid, according to a spokesperson.

The bidding process has been watched closely by many players in Maine’s health care circles, and Anthem’s emergence as a possible sole bidder came as no real surprise.

While some championed a partnership with the insurance giant as the state’s best chance at succeeding with its ambitious plan, others cautioned that Anthem’s interest is driven by self-protection.

Monday was the deadline for private insurers to let the state know whether they intended to bid on providing the controversial health care coverage the state hopes to start offering in July.

If no acceptable bid were received by a June 11 deadline, the state would be faced with creating its own nonprofit state agency to offer the insurance.

Gov. John Baldacci’s office of health policy and finance would not reveal how many bids were received by the end of the day Monday. But of the five insurance companies that attended a bidders conference last week, four – Cigna, Aetna, Harvard Pilgrim Health Care and United Health Care – have dropped out.

Anthem spokesman William Cohen confirmed Tuesday that his company had filed an intent to bid. But he added that company officials may or may not follow through with an actual bid to administer the state-sponsored health insurance plan that will be called Dirigo Health CareWorks.

Anthem officials are still analyzing the state’s 400-page request for proposals, Cohen said, and filing was the only way to keep options open while the company examines the complex document.

The company will have no further comment on its interest in the Dirigo plan until bids are opened, according to Cohen.

Companies other than those represented at the conference may have filed by the deadline, but without the state’s confirmation, Anthem remains the only known potential bidder.

Investor-owned Anthem dominates Maine’s health insurance market. In 1999, amid intense controversy, the Indiana-based corporation purchased Maine’s financially troubled nonprofit Blue Cross and Blue Shield programs.

Last year, Anthem announced it would acquire the Wellpoint insurance company; that merger, which is in progress, will create the nation’s largest for-profit health insurer.

Joe Ditre, executive director of Consumers for Affordable Health Care, has worked closely with the governor’s office and other health care advocates throughout the process of creating the Dirigo initiatives. Ditre lobbied hard against the Blue Cross sale and has been publicly critical of Anthem’s steep rate hikes and its strong profit motive.

But Ditre said Tuesday that the company’s expertise and deep corporate pockets would give it an important edge in starting up and administering the complex DHCareWorks plan.

Though the state will play a strong administrative role, Ditre said, the Anthem name might be reassuring to consumers and small-business owners who hesitate to join forces behind Dirigo’s unique funding formula, which uses an untried system of subsidies and other sliding-scale incentives to hold costs down.

Ditre said that, although he is still wary of Anthem’s corporate goals, “the law that established Dirigo sets such a high standard that consumers will be well-protected regardless who administers it. … This is not just another Anthem product.”

Christopher St. John, executive director of the Maine Center for Economic Policy, serves on the Dirigo Commission to Study Maine Hospitals. St. John pointed out that having more bidders vying for the Dirigo contract would tend not only to impel lower bids but also to inspire creativity in meeting the specifications of the proposal.

But, he said, “Anthem may be the only company with the guts to take on the job.”

Anthem has a vested interest in remaining the dominant private insurer in Maine, St. John pointed out, and there’s nothing to prevent the state’s DHCareWorks from expanding into Anthem territory in the future.

With such lucrative contracts as the state employees union and the University of Maine System at stake, St. John suggested Anthem might prefer to partner with the state rather than trying to outstrategize the potential competitor.

At the conservative Maine Heritage Policy Center, Director of Health Reform Initiatives Tarren Bragdon said the apparent lack of bidding enthusiasm on the part of insurers shows “there are big questions about the viability and marketability” of the DHCareWorks product.

“Insurers recognize it’s going to be a tough sell to the business owner,” Bragdon said, in part because those employers will be forced to pay 60 percent of the cost of insuring their workers and in part because the plan provides a confusing and inherently discriminatory benefit package.

A sliding scale of subsidies and out-of-pocket spending caps means that employees doing essentially the same job but with slightly different pay may qualify for different benefits, he said. “The lower the income, the higher the subsidy and the richer the benefit,” he said.

Bragdon said insurers are also wary of the role the Department of Human Services will have in tracking the funds that flow in and out of the DHCareWorks books. “If money gets lost or is late getting to where it’s supposed to be, who’s going to be liable?” Bragdon asked.

Also weighing in on Tuesday was professor Andy Coburn, director of the Institute for Health Policy at the Muskie School of Public Policy in Portland. “Anthem has a lot at stake here,” Coburn said. “It doesn’t want to say no. But can it afford to say yes?”

Among the challenges any private company will encounter in taking on the DHCareWorks plan is managing the tricky relationship between the insurance product and Maine’s Medicaid program, Coburn said.

DHCareWorks is unique in offering a “wrap-around” benefit that pays some expenses not covered by Medicaid, he said – just one example of the many ways in which the state is breaking new territory.

Trish Riley, the head of the Governor’s Office of Healthcare Policy and Finance, said the Dirigo board of directors has some authority to negotiate with any bidder to fine-tune an agreement. “There are limits; they can’t rebid the whole process,” she said.

If no bid is received by June 11, or if an agreement cannot be reached, the state is authorized to move forward in creating an insurance company of its own to provide the Dirigo product.

Riley said the governor stands ready to go that route but would prefer to enter into a workable public-private contract.

The Legislature would have to approve the nonprofit startup and all observers interviewed Tuesday cautioned that such a move would delay the kickoff of DHCareWorks by at least six months and could lead the administration into a political and logistical quagmire.