University of Arkansas System Cancels QualChoice's Contract

by Mark Friedman  on Monday, Oct. 8, 2012 2:47 pm  

Mike Stock, CEO of QualChoice, said the company has had a "very good partnership with UAMS" since the firm's inception. (Photo by Mike Pirnique)

The University of Arkansas System said Monday that it will cancel the contract under which QualChoice handles third-party administrator duties for its employee health plan, even though the University of Arkansas for Medical Sciences has an ownership interest in the Little Rock health insurance company.  

The UA System has hired UnitedHealthcare of Hartford, Conn., which on Jan. 1 will begin managing the administration duties for about 35,000 employees and dependents covered by the system's health insurance, said Ann Kemp, vice president for administration for the UA System.

The UA's health plan includes campuses at the University of Arkansas at Fayetteville, Pine Bluff and UAMS.

"Our health care costs continue to increase at a level that we just can't sustain, and we are looking at everything," Kemp said.

One of the areas it reviewed was third-party administration fees.

The UA System asked for bids on the work on June 29. Kemp said that five companies submitted bids, and a committee recommended that the UA System President Donald Bobbitt contract with UnitedHealthcare.

Kemp said late Monday morning that she would have to check with the UA's attorney before she could release the amount of money the UA System will pay United. She didn't have the amount it paid QualChoice immediately available.

UA's contract with QualChoice was binding until June 30. Kemp said the UA could cancel the contract with a 90-day notice, which it has given.

She said the UA System had been using QualChoice's services since 1995.

UAMS assisted in starting QualChoice in the early 1990s. In 1999, UAMS helped launch QualChoice's QCA Health Plan Inc. and gave it $1 million. UAMS received an 11.59-percent share of the health plan.

"We have a very good partnership with UAMS and have had since our inception," Mike Stock, QualChoice's CEO, said on Friday. "There are people from UAMS who continue to serve on our board and will continue to serve on our board."

Currently, QualChoice Holdings Inc. is owned by QuaChoice of Arkansas Inc., with a 46.8 percent stake; The Trizetto Corp. of Denver, 43.5 percent; UAMS, 8.6 percent; and Arkansas Children's Hospital, 1.07 percent, according to records on file at the Arkansas Insurance Department.



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