New claims of possible bid rigging and unfair trade practices within the Office of Group Benefits (OGB) and the Division of Administration (DOA), have surfaced in a two-page letter sent to the U.S. Attorney’s office and to LouisianaVoice this week.
OGB is a multi-billion dollar agency which administers health benefit claims for state employees, retirees and their dependents.
If true, it would be the third time in less than two years that insider negotiations have been conducted between a potential bidder, OGB and DOA preparatory to DOA’s issuing a request for proposals (RFP).
A copy of the unsigned, undated letter also was addressed to State Rep. Katrina Jackson (D-Monroe) and to Louisiana Inspector General (IG) Stephen Street, though the writer expressed skepticism over any anticipated action by the IG’s office.
“I am writing as a concerned citizen who has had enough,” the letter said. “I write out of concern that there is something fundamentally wrong with the operations of the Division of Administration. I included the Inspector General out of protocol, but not with the expectation that he will act.”
The letter accused DOA, through OGB of engaging “in a pattern of behavior that has to be, at the very least, unethical” in its dealings with a South Carolina company.
“Within the past few months, the staff of the Office of Group Benefits has been instructed to conduct multiple meetings with a business called BenefitFocus (which is in the business of group health eligibility activity).
“The problem with these meetings is that the blatantly expressed reason for the meetings is the preparation of an RFP on which the company will then bid.
“In fact, in the last meeting,” the writer said, “there was an open discussion on how to either construct an RFP that will yield the company an insurmountable advantage or (that would) make the company a ‘sole source’ vendor that will eliminate competition.”
BenefitFocus is headquartered in Charleston, S.C. and its web page describes it as “the country’s leading provider of benefits technology.” It claims more than 18 million members and 300,000 employers who manage “all types of benefits” through the company which “provides employers, insurance carriers, consumers and government entities with cloud-based technology to shop, enroll, manage and exchange benefits information.
“BenefitFocus clients include small, medium and large employers from all industries, as well as the nation’s top insurance companies,” the website says.
Among the clients listed were Blue Cross/Blue Shield in several states, including Louisiana.
The anonymous writer described the activity between OGB and BenefitFocus as a “pattern,” saying such events have occurred at least twice before.
“The first instance was when OGB (by order of DOA) was looking for a financial advisor. The eventual successful vendor was Goldman Sachs, who had participated in multiple OGB meetings before the bid process and who even had the audacity to help write the RFP,” the letter said.
On April 13, 2011, CNS learned that Goldman Sachs had been active in discussions about the planned privatization of OGB as far back as October or November of 2010. That was about the same time that the idea of privatizing OGB was first floated to then-OGB CEO Tommy Teague in a meeting between then-Deputy Commissioner of Administration Mark Brady, Teague and four representatives of Goldman Sachs.
Teague was fired two days after LouisianaVoice published that story.
When it came time to open the proposals for the project, Goldman Sachs was the only bidder and stood to receive $6 million in fees for its services, whether it was successful in finding a buyer for OGB or not.
Gov. Bobby Jindal eventually rejected the Goldman Sachs bid after details of the Wall Street banking firm’s involvement were made public and Blue Cross/Blue Shield of Louisiana was ultimately awarded the contract to serve as a third party administrator over OGB’s preferred provider (PPO) organization. BCBS also administers other claims for OGB under a separate contract.
“Earlier in 2012, the letter said, “OGB staff was directed to have multiple meetings with Extend Health, a company in the Medicare Advantage exchange business. The staff attended the meetings and helped answer background questions.
“In later activity with the company, an RFP was drafted (a very narrow drafting) that gave Extend Health a nearly sickening advantage in the bidding,” the writer said. “Of course, Extend Health won.”
Extend Health, the largest private Medicare exchange in the U.S., offers access to multiple Medicare plans for 2013. Retirees who enroll in a Medicare plan through the Extend Health exchange are enrolled in a health reimbursement arrangement (HRA) and received HRA credits of $200 to $300 per month from the state up to a maximum of $2,400 per year for single coverage and $3,600 for family coverage.
The credits may be used to pay premiums for Medicare Advantage plans, Medicare Part B. Medicare Part D prescription drug plans, Medigap plans and dental and vision plans.
LouisianaVoice has made public records requests for copies of all correspondence between OGB, DOA and BenefitFocus.
Let’s see how long it takes DOA to invoke the ol’ “deliberative process” exemption.