Montana ready to award contract for state employee health plan after reopening bidding

Montana Department of Administration
Posted at 5:56 PM, Jun 25, 2024

HELENA — After reopening a bid earlier this year for a company to manage health insurance for state employees, the Montana Department of Administration says they’re ready to award a contract – to the company that has been handling those services the last two years.

DOA announced it will be entering negotiations with Blue Cross Blue Shield of Montana, to finalize a contract for the company to remain the “third-party administrator” for the state employee health plan.

“Contracting with BCBSMT will continue our efforts to be responsible stewards of the State Plan contributions while maintaining high-quality medical care for our state employees and retirees,” said DOA Director Misty Ann Giles in a statement. “We are excited to have issued this RFP under the new provisions within SB 51, which will allow our vendors to participate in a truly competitive process while allowing our citizens to review and engage in our procurement activities before a contract is finalized.”

The decision comes after department leaders said in January they would take the unusual step of reopening bidding for the third-party administrator contract, because of questions about whether all the bidders had the same understanding of the requirements.

The state health plan provides health benefits for about 28,000 members – including state workers, their family members, retirees and legislators. In 2022, DOA announced BCBS would take over managing it starting Jan. 1, 2023, in a three-year deal they said would save the state around $28 million.

However, in January, the department said they were ending that contract a year early and conducting a new bid process for a contract that would begin Jan. 1, 2025.

Allegiance Benefit Plan Management – the company that had been administering the state health plan since 2016 – filed a protest against the state’s selection of BCBS. They made a number of allegations, including that the state’s evaluators hadn’t scored all companies consistently and that the state had changed the bid requirements during the process.

A DOA spokesperson told MTN in February the department’s decision to reopen the bidding wasn’t in response to Allegiance’s protest or any of its specific allegations, but that the protest did start the process that led to the decision to rebid.

BCBS and Allegiance were again finalists this time around. DOA released information on their evaluation of the two bidders on their State Procurement Bureau’s website. The documents show the evaluation committee scored the companies similarly on many aspects of the bid, but they ranked BCBS higher in several areas, including the claim administration system, plan implementation and transition, and provider network development. An evaluator also gave BCBS an advantage on overall cost, specifically because of lower administrative fees.

BCBS released a statement to MTN in response to the DOA announcement:

“We are grateful that the State of Montana again confirmed that Blue Cross and Blue Shield of Montana is best positioned to help it drive better health outcomes and lower the cost of care over time for its employees,” said BCBSMT President Lisa Kelley. “We were able to demonstrate the value of our outstanding account management and customer service as well as help the state enhance its approach to identifying and managing health risks among employees while working to lower health care costs.”

A new state law passed in 2023 requires leaders to give a weeklong public comment period before officially awarding the contract. They will be accepting comments on this award through Sunday, June 30. DOA asks anyone wanting to make a comment to email Enterprise Procurement Supervisor Gwenette Ungerman and reference “Medical TPA RFP.”

A spokesperson for DOA says the new contract with BCBS is expected to start Jan. 1, 2025 and extend for another three years.

Editor's Note: This story has been updated to include statements from the Department of Administration and Blue Cross Blue Shield of Montana.