Firm withdraws as city’s health insurance administrator

A local company selected by the city to administer its health plan for employees is withdrawing.

Dunn & Associates, which provides administrative services for Bartholomew County’s insurance plan, won the contract for the city’s services Oct. 6. The Columbus Board of Works accepted Dunn’s proposal for the contract, agreeing to pay $118,000 to the company.

Board of Works members selected Dunn over SIHO Insurance Services of Columbus, which had the contract for about 10 years prior to the switch.

Dunn & Associates did not respond to several requests for an interview seeking information about why the company no longer wanted to administer the city’s health plan.

Mayor Kristen Brown said it was widely rumored that incoming Mayor-elect Jim Lienhoop had planned to cancel the Dunn contract when he took office in January, and that Dunn & Associates was unwilling to invest in required work if the city would be changing its insurance administrator in a few months. Switching the health care administration in January would cause a lot of disruption, Brown said.

The city is delaying conducting its health insurance open enrollment until another insurance administrator can be selected, the mayor said.

Lienhoop, however, said there is no truth to the rumors.

The mayor-elect, who said he had not read the Dunn contract and did not know its terms, had called Dunn & Associates president Cathy Dunn last week to set up an appointment to talk about the effects of the administrative change on the city’s health care costs.

“There were no plans to cancel with Dunn,” Lienhoop said.

He and Cathy Dunn traded phone messages for a few days. Then on Oct. 26, Lienhoop said Cathy Dunn called him to say there wasn’t a need to meet as the company had decided to withdraw.

“I was very surprised by that,” said Lienhoop, who added that he did not ask the company why it was withdrawing.

Brown said the city has already notified SIHO that it was canceling its contract at the end of 2015. Open enrollment for health insurance for city employees — which normally begins in mid-October — has been delayed as city officials sort out what to do next, she said.

The mayor said she was also planning to speak with Jim Bickel, chief executive officer at Columbus Regional Hospital, after hearing that the hospital may not honor the requested discounts city employees had previously received with SIHO if the company went with Dunn & Associates. The mayor also alleged that Dunn’s decision related to the fact that the hospital owns part of SIHO.

“We need assurance that regardless of the insurance administrator, our employees keep their medicine discounts,” she said.

Dunn & Associates did notify the hospital last week that the company would not be the city’s third-party administrator, said Kelsey DeClue, public relations coordinator for Columbus Regional Hospital.

None of the reasons Dunn & Associates gave for its decision had anything to do with pricing discounts, DeClue said.

It would not make sense to reject any offer or negotiation with Dunn & Associates as the hospital had not even been approached by the company to negotiate the city’s health care contract, DeClue said.

The hospital was never approached by any bidders — potential third-party administrators or city representatives — during the city’s process to find a new health plan administrator, DeClue said.

As a health care provider, the hospital does not work directly with an employer such as the city to negotiate discounts, DeClue said. Instead, the third-party administrator selected by the employer negotiates the plan with the hospital.

DeClue confirmed that SIHO is owned by four entities — Columbus Regional Hospital, Schneck Medical Center, IU Health and Multi-County Physicians group, a community-based group of physicians in Bartholomew, Jackson, Jennings, Brown and Monroe counties. Each of the entities has a representative on the SIHO board, DeClue said.

The hospital’s involvement with SIHO is similar to what other health systems are doing nationwide, an effort to create a relationship among health care providers, insurance providers and others working together on patient care, DeClue said. The relationship brings an integrated health care package to employers that adds value to companies and employees seeking quality health care.

The hospital itself negotiates each year for a health plan for its employees, and those negotiations pertain to the managed care plan and how it fits employer and employee needs best rather than ownership dynamics of the third-party administrator, DeClue said.

Third-party administrators negotiate details about delivery of care, costs, where employees will go for their health care and how much choice will be allowed in those decisions, she said.

A city insurance committee, made up of insurance professionals, city employees and city councilman Kenny Whipker, had approved a recommendation Oct. 5 asking the board of works to hire a consultant to examine the four proposals received from companies to administer the city’s health plan.

However, board of works members Bob Sullivan, Jason Hyer and Brown voted to make the switch from SIHO to Dunn on Oct. 6 rather than seek an evaluation of the proposals from an insurance professional before making a decision.

Proposals to administer city's insurance

Columbus received four proposals to administer its health care plan for employees. They included:

  • Dunn & Associates, Columbus, $118,008 with a 100 percent pharmacy discount and rebates passed back to the city.
  • SIHO Insurance Services, Columbus, $199,056, with a pharmacy rebate offset of $47,520 that would be subtracted from the overall amount. The SIHO proposal included a $5 charge per employee per month for insurance coverage after an employee leaves a job, that should not have been included in the comparisons. That brought SIHO’s proposal down to $172,656 with $47,520 to be subtracted for the pharmacy rebate offset, for a final number of $125,136.
  • Unified Group Services, Anderson, $153,120.
  • Benefit Administrative Services, Chicago, $141,920 with 100 percent of pharmacy discounts and rebates passed back to the city.

What's next

The city has delayed employee open enrollment for its health insurance plan until another health insurance administrator is selected, Mayor Kristen Brown said. The enrollment normally occurs in mid-October.

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Julie McClure is assistant managing editor of The Republic. She can be reached at jmcclure@therepublic.com or (812) 379-5631.