DeB’s health-careless tax-dollar waste: suit
The de Blasio administration missed a glaring math error when choosing a new health-care insurance provider for 275,000 retired city workers, a blunder that could cost taxpayers “tens or even hundreds of millions of dollars” in lost revenue, according to a claim filed by rival bidder Aetna, the state’s largest Medicare provider.
Aetna has sued the city alleging the selection process was fixed to favor Alliance, a consortium that includes Emblem Health and Anthem/Blue Cross Blue Shield and has strong ties to union leaders, to operate the new Medicare Advantage Plus program.
A group of retirees has filed a separate lawsuit to block the implementation of the new $34 billion, 11year Medicare plan — called Alliance Medicare Advantage — claiming they are being forced into a new plan that costs more for fewer benefits.
City officials have defended the choice of winning bidder Alliance, saying it offered the best plan.
Aetna came in second place in the bidding process, and said it discovered the issue over profit sharing while reviewing the terms of the Alliance’s proposed contract with the city after filing its lawsuit.
The Alliance contract included a “gain share” stipulation in its contract that guarantees it will keep the overwhelming majority of the profits it initially promised to share with the city — a “sleight of hand” that either went unnoticed by the city and the union leaders negotiating the health-care changes, or was slipped in afterward as a “bait and switch,” according to a Nov. 9 protest letter Aetna filed with the
city’s Office of Labor Relations, a copy of which was obtained by The Post.
“A close reading of the proposed contract reveals that the public is being taken for a ride,” Aetna lawyer Claude Millman said in the letter.
The contract says Alliance won’t have to share any profits in any year when the city is not required to pay a premium. This means that, at most, the city could receive about $23 million from the Alliance contract because Alliance has agreed to charge the city premiums only in its first year, according to Aetna.
But it’s actually more likely the city (and taxpayers) will receive little or nothing in savings in the first year as profits don’t typically materialize until later, Aetna claims.
A spokesman for the city Law Department acknowledged the gainsharing discrepancy in the proposed contract — but insisted it was scrapped from the final deal.
“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 department representative Nick Paolucci.
The language in the draft contract was “inconsistent with the parties’ intention on gainsharing,” city officials said.