Blue Cross lands multimillion-dollar contract for RI state workers

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PROVIDENCE, R.I. (WPRI) – Blue Cross & Blue Shield of Rhode Island has won back the lucrative contract to administer the state’s medical benefit program for its 17,000 eligible employees.

The R.I. Department of Administration on Tuesday said Providence-based BCBSRI won a competitive bid over three other insurers including UnitedHealthcare, which currently holds the contract. While the state is self-insured for health insurance, it hires an outside company to actually manage benefits and claims.

The selection is a big win for BCBSRI, which protested publicly when it lost the contract to UnitedHealthcare in 2004. At the time the company argued its offer was better than United’s, but the claim was rejected by Republican then-Gov. Donald Carcieri.  

“We are looking forward to working with Blue Cross & Blue Shield of Rhode Island and ensuring a seamless transition for our state employees and non-Medicare-eligible retirees,” said Director of Administration Michael DiBiase, who put the contract out to bid in February.

The terms of the deal have not yet been finalized, but based on its proposal to the state, BCBSRI could earn nearly $4 million in administrative fees each year. A total value — along with specifics related to costs and offered benefits — will be hammered out in negotiations with the state in the next few months, according to a spokesperson.

BCBSRI president and CEO Kim Keck in a statement said the company was honored by the state’s selection.

“In this role, we see an important opportunity to realize our vision of passionately leading a state of health and well-being across Rhode Island while providing access to affordable, high quality health care for all Rhode Islanders,” Keck said.

In addition to the medical benefits, CVS Caremark – owned by Woonsocket-based CVS Health – will continue to oversee the state’s pharmacy benefits program, according to DiBiase. There are no third-party administrator fees for pharmacy benefits, which was put out to bid with the medical program.

“Both companies have deep ties to the community and will provide significant value to our members and to the taxpayers of Rhode Island,” DiBiase said.  

CVS beat out competition from BCBSRI and Express Scripts to hold onto the pharmacy program.

UnitedHealthcare over the last five years charged more than $6 million in annual fees to administer the medical benefits program, about $2 million more than the amount proposed by BCBSRI.

The insurer, which proposed a similar fee this time around and ultimately lost out to BCBSRI, did not immediately respond to a request for comment. Aetna and Tufts also submitted unsuccessful bids.

During the 2019-20 fiscal year, Rhode Island paid $183 million in medical claims through UnitedHealthCare and $44 million in pharmacy claims through CVS.

Eli Sherman ( is a Target 12 investigative reporter for WPRI 12. Follow him on Twitter

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