Health Alliance bypassed for Medicare Advantage contracts

Thousands of retired state workers in the Springfield area would lose coverage from Health Alliance Medical Plans based on contract decisions announced by the state this week, but those retirees would be able to keep their Springfield Clinic doctors.

“Those members would still have a medical home at Springfield Clinic,” Mark Kuhn, chief administrative officer at the Springfield-based multi-specialty group, said Wednesday.

The Illinois Department of Central Management Services on Tuesday announced the selection of four contracts for Medicare Advantage plans that will serve 123,000 retirees statewide, most of them 65 or older.

Urbana-based Health Alliance was among the bidders but wasn’t selected for what could end as 10-year contracts worth a total of almost $4.2 billion.

The company is considering whether to appeal the decision within administrative channels, according to Health Alliance senior vice president Jane Hayes.

Health Alliance was “surprised and disappointed” by the state’s decision, she said. “We’re looking at our options.”              

Health Alliance serves 15,000 Medicare-eligible state retirees affected by the new contracts. Several thousand of those retirees live in the Springfield area, and many of them use Springfield Clinic doctors through different contracts with the state.

Kuhn said those retirees will be able to continue with Springfield Clinic doctors because the clinic is part of the Humana and Aetna networks offered by companies that won contracts this week for coverage that begins Jan. 1.

The plans include a health-maintenance organization plan from Aetna Life Insurance Co., an HMO plan from Humana Health Plan, an HMO plan offered by Humana Benefit Plan, and a preferred-provider plan offered by UnitedHealthcare.

Currently, Medicare-eligible state retirees have about 80 percent of their health-care costs paid by the federal Medicare program. The remaining 20 percent is covered by one of the health insurance plans offered to active workers.

Offering this type of Medicare supplement coverage through standard insurance plans is costly, according to CMS officials who have said the state could save more than $100 million annually by switching these retirees to Medicare Advantage plans.

With Medicare Advantage, Medicare benefits are provided by a private insurance company rather than the federal government. The insurer receives a stipend from the federal government for providing the benefits.

Health Alliance’s exclusion from the state’s new Medicare Advantage contracts appears to be a more significant issue for patients in the Champaign-Urbana area. That’s because about 6,000 retirees in that area who receive their care through the Carle health system may have to change doctors.

The Carle doctors aren’t included in any of the Medicare Advantage networks of the companies awarded contracts, Hayes said.

Health Alliance’s Medicare plans have been rated among the top in the state by the National Committee for Quality Assurance, she said.

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