Sunday, April 5, 2009

Bid Rigging at College of DuPage (Health Insurance Broker)

Background

The requests for proposal were due on March 25, 2008. According to the RFP, "There will be no public opening of any proposals received." The College has "approximately 950 benefited employees and 50 retirees," and provides Blue Cross/Blue Shield. According to Section V, Instructions, of the the RFP, "The College expects the vendor to be able to deliver the current level of employee health insurance benefits as described in the College of DuPage Comprehensive Group Benefit Plan."

The RFP asked brokers to:

1. List the top 4 carriers, in relevance order, that you would propose to the College of DuPage to enable your firm to provide the scope and magnitude of the coverages and services required by the College of DuPage employee health plan coverages and services required by the College of DuPage employee health plan with the best possible service at the best possible cost.

2. Identify the length of your relationship with each of the Third Party Administrator and/or Health Insurance Provider listed above.

3. Provide a rationale for the selection of your top 2 carrier choices.

Since the college could not change from BC/BS until current employee contracts expire in 2011, we're unclear as to why Purchasing wanted carriers other than BlueCross.

Under the Proposal Evaluation section of the RFP:

The second step of the RFP includes assigning one or two health insurance providers to each identified broker to negotiate the best costs and services for the College based on the existing health insurance plan for the College's employee medical insurance needs...The College's objective is to select a firm who will provide the best possible service at the best possible cost while meeting the Request for Proposal specifications. The College is not obligated to award the contract based on cost alone. The College of DuPage reserves the right to accept or reject any or all proposals and to waive formalities and select the firm that best meets the needs of the College and its employees.

The Bids

Corporate Benefits Consultants "secured initial quotes from our assigned carriers in time for the original deadline of May 12, 2008." CBC had been assigned United HealthCare (remember, the school uses BlueCross/BlueShield) and Guardian Dental. CBC submitted some additional comments with its package:

"As a final comment, our top priority and objective is to present and make recommendations to our clients only after gathering all possible opportunities and diligent review of the facts. We often compete for business through the RFP process and make every attempt to fully comply with the expectations set forth in the RFP.During this process with College of DuPage, we have been assigned United HealthCare and Guardian as the markets we can approach on behalf of COD. As previously stated we are in the process of fully reviewing and evaluating both of these carrier's offerings.We believe each of these carriers assigned to us, will in fact put their best offer on the table for COD. However, we would be hesitant to recommend either carrier over other carriers in the marketplace without having the opportunity to thoroughly review and compare side by side. On the same note, we would not want to be hired based on "luck of the draw." In other words, have COD make a decision to hire CBC just because we were assigned a particular carrier that came in with the best rates for the current year when in fact it may not be the best decision for COD in the long run.

Mesirow Financial was assigned Aetna and Cigna. Byrne & Byrne, the firm that Trustee Joe Snyder brought in as the interim broker, was assigned Blue Cross/Blue Shield and Humana. Guess who received the contract as insurance broker? Why weren't all three firms bidding using Blue Cross/Blue Shield?