By: Hellen Zaboulani
The de Blasio administration is fighting criticism for its selection process, in which it chose Alliance Health Care insurance to cover 275,000 retired city employees.
As reported by the NY Post, the city is being sued by a rival bidder, Aetna , who alleges that the selection process was fixed, and that a math mistake will cost NYC taxpayers “tens or even hundreds of millions of dollars” in lost revenue. In the bombshell claim, Aetna, the state’s largest Medicare provider, also alleges that Alliance, a consortium including Emblem Health and Anthem/Blue Cross Blue Shield, got the deal to operate the new Medicare Advantage Plus program thanks to its strong connections with union leaders.
A second lawsuit has also been filed by a group of city retirees, who hope to halt the new $34 billion, 11-year Medicare supplemental plan named Alliance Medicare Advantage. The group claims that they are being forced into the new plan, which will be more expensive and provide less in benefits.
As per the Post, repeatedly, city officials have deflected the assertions, saying Alliance had the best plan. Aetna came in second place in the bidding process, and said that it found a grave error while reviewing the terms of Alliance’s contract.
The city’s new contract with Alliance includes a “gain share” stipulation which essentially guarantees the insurer will keep most of the profits, even though it initially promised to share gains with the city. The “sleight of hand” either went unnoticed by the city and the union leaders, or was slipped in afterwards as a “bait and switch,” says a protest letter Aentna filed on Nov. 9 to the city’s Office of Labor Relations. “A close reading of the proposed contract reveals that the public is being taken for a ride,” Aetna lawyer Claude Millman wrote in the letter.
Aetna claims that the city will make drastically lower profits with the Alliance contract than with its proposal. “Multiplied over the course of the contract, the City stood to receive hundreds of millions of dollars in possible gain share payments from Aetna. From the Alliance, it will collect, at most, $23 million,” said Aetna Vice President Richard Fonmeyer.
A spokesman for the city Law Department responded on Sunday night, saying the problematic clause has been corrected. “We believe the Alliance will provide superior coverage for our retirees. The gainsharing provision being raised here was a provision in a draft contract which has been subsequently revised. The gainsharing provision in the final contract is advantageous to the City,” said Law Department re Nick Paolucci.
