Humana, Health Alliance lose state contracts

Humana (NYSE: HUM) and Health Alliance Medical Plans are protesting a decision by the state of Illinois to drop them as health insurance options and instead use Blue Cross Blue Shield of Illinois, reports the News-Gazette.

The Illinois Department of Healthcare and Family Services believes the switch in insurance companies will save roughly $102 million per year. However, Health Alliance questions the validity of this figure, the Daily Eastern News reports. "We are concerned about their claims," said Jocelyn Browning, communications manager for Health Alliance. "We don't think they have the correct numbers. We are working to try to show what they are claiming is unfounded."

Jeff Ingrum, CEO for Health Alliance, says the state's estimate for savings is "highly suspect." He said it is only possible to save $100 million next year if everyone currently enrolled in Health Alliance enters the Blue Cross plans. However, Blue Cross does not have the statewide network of providers that would be necessary to accommodate all those new subscribers, notes the State Journal-Register.

Humana and Health Alliance also argue that many of the more than 100,000 people in their plans would have to travel to see primary care doctors or pay higher rates under the new contract with Blue Cross, according to the Associated Press.

State employees and retirees are set to begin enrolling in new health plans May 1, but Illinois can't award the new contracts to Blue Cross while the Health Alliance and Humana protests are pending. But no one can say for certain how long it will take to resolve the issue, notes the State Journal-Register.

To learn more:
- read the News-Gazette story
- see the Daily Eastern News article
- check out the State Journal-Register piece
- see the Associated Press story