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CIGNA pulls out of Manchester health care bid

New Hampshire Union Leader

April 24. 2012 6:58PM

MANCHESTER - After the Board of Mayor and Aldermen extended bidding to allow Anthem Blue Cross and Blue Shield New Hampshire another chance to submit an offer to administer Manchester's health care books, CIGNA health insurance took back its bid and told the city it will not be making another offer.

Donald Curry, New England president and general manager for CIGNA, notified the city in an email last week it was rescinding its offer for health care administrative services. The aldermen and Board of School Committee had asked both CIGNA and Anthem to return their "best and final offers" by Wednesday, April 18. Curry told the city it had already made its final offer.

"It is my understanding that CIGNA offered the most competitive bid and was recommended by the benefits committee," wrote Curry. "CIGNA has already presented their final Best and Final Offer. It has been summarily dismissed. We now retract that offer to both the City of Manchester and the Manchester School District. Further, we will not engage with either party in any future bidding process at this time."

The Board of Mayor and Aldermen met on Tuesday and were supposed to debate which health insurance company bid to choose. Instead, the aldermen met in a closed door session with City Solicitor Tom Clark for an hour. When the aldermen emerged, they voted 12-2 to accept a five-year deal offered by Anthem that will save the city an estimated $1 million.

Manchester is self-insured, meaning it pays employee health care costs directly to providers. The request for bids was to seek companies to administer the paperwork, run special programs and negotiate prices with providers on the city's behalf. The bidding process for the city and school district's health care accounts closed weeks ago and Mayor Ted Gatsas' benefits selection committee had recommended CIGNA as the best deal for the city.

Switching from Anthem to CIGNA would under the original proposals would have saved an estimated $1.5 million, but some aldermen and school board members questioned the level of service offered by CIGNA, how the selection process was conducted, and whether the switch would actually save the city the promised amount.

At the April 17 meeting with the aldermen and school board, Anthem came forward pledging to drop $1 million from its final offer to keep the city's business. The two boards decided to give Anthem a chance to submit this amended offer and gave CIGNA the same opportunity. CIGNA decided not to take the city up on its offer.

In his email, Curry wrote that any breach or omission is reason for disqualification under public sector procurement procedures and that new information is not allowed after deadline.

"In a procurement bid for a $53 million public entity expenditure, we were under the impression that these standards would be maintained. They were not," wrote Curry.

In its amended offer, Anthem has pledged to charge the city and school system about $566,000 per year for administrative services. CIGNA had offered to charge about $486,000 annually for the same service.

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