GHI privatization may not go through

After at least two years of review and preparation, the CNMI government may not be able to privatize its group health insurance program after all.

NMI Retirement Fund Board of Trustee chair Joseph Reyes confirmed yesterday that negotiations with one provider has been completed and that the government believes that its proposal is “not to the best interest” of program members and the Commonwealth.

“Based on the information reaching me, the proposal was deemed to be not in our best interest. One major issue is the increased rate. It would be too big,” said Reyes yesterday.

He said the board is now awaiting the final report of the privatization committee, composed of representatives from the Fund, Governor’s Office, Attorney General’s Office, Department of Finance, and the Department of Health.

The board will meet on Friday to formally discuss the matter.

Another government official who is privy to the issue said on condition of anonymity that the privatization proposal has been “rejected.”

When asked about this issue last week, NMI Fund administrator Karl T. Reyes said that the government has completed its negotiation with a lone health insurance provider, Select Care.

He declined to reveal the result of the discussion, noting that it would remain confidential until the government’s Hawaii-based consultant, Karen Bauder, completes her written report.

Bauder was hired in 2004 for $90,000 a year to evaluate the privatization proposals and make recommendations.

Select Care was the only company that submitted a complete proposal for the program.

The Fund began its efforts to privatize the group health insurance program since two years ago following suggestions from Gov. Juan N. Babauta, who favors a cafeteria-style program in which group health program members could choose services from more than one health care provider.

Meantime, the board chairman said that in case of lack of a private provider, the Fund would have to continue using the services of its third party administrator, Hawaii Pacific Medical Referral, or the Fund would be forced to handle the program itself.

In anticipation of the privatization, the board had terminated HPMR’s original three-year contract with the Fund in July last year. But due to the lack of the government’s preparedness, HPMR’s contract has since been extended on a staggered basis.

Right now, HPMR’s extended contract ends on Dec. 31, 2005.

The board recently put out a Request for Proposal for a third party administrator. Reyes said yesterday the RFP is open to HPMR.

At the same time, the board has approved another RFP for prescription drugs services.