A Superior Court judge sided with retired state employees in a Wednesday ruling ordering Delaware to pause plans to transfer 30,000 retirees from standard Medicare plans to Medicare Advantage.
The ruling comes after the retiree advocacy group RISE Delaware sued the state’s State Employee Benefits Commission (SEBC) and other state officials for allegedly violating open government and public administration laws when planning and executing the change in health insurance plans.
A Medicare Advantage plan gives a private insurer – in this case, Highmark Delaware – greater control over coverage decisions in exchange for assuming financial risks previously borne by the state.
Judge Calvin Scott's ruling points out the state assured retirees their benefits would not change before finalizing a contract with Highmark Delaware. The SEBC issued a letter to retirees in June promising that the new plans would offer "the same level of medical plan benefits"; however, Scott noted, the SEBC seemingly didn't become aware that the new plans would include pre-authorization requirements for more than 1,000 procedures and would require retirees to use in-network doctors – primary causes for concern among opponents — until August. The state did not finalize its contract with Highmark Delaware until September 28.
"This court cannot agree that the need for prior authorizations for over 1,000 procedures and the use of only in-network doctors is the same level of benefits retirees obtained with the current policy," Scott wrote.
Plaintiff and former state senator Karen Peterson says the interim ruling gives retirees more time to consider their options; the state originally planned to transfer retirees to new plans on January 1, and the deadline for open enrollment ends on October 24.
“For now, they can’t do anything with regards to moving retirees into a Medicare Advantage Plan," she said. "There could be a trial, there could be an appeal by the state – the ball is kind of in their court.”
Meanwhile, the General Assembly is planning to reconvene on October 26 to discuss the proposed shift to Medicare Advantage plans. Lawmakers will consider a bill that would increase the state's oversight of the transition — including any increases in coverage denial rates resulting from the new pre-authorization rules — but Speaker of the House Pete Schwartzkopf and House Majority Leader Valerie Longhurst wrote on Wednesday that the ruling could overshadow their original plan.
"The Superior Court ordering a pause injects uncertainty into this situation for our retirees, but we are committed to supporting them throughout this process," they wrote. "Legislators will re-engage the administration and our retirees on next steps and how to ensure that current and future pensioners are protected and receive the best possible care."
If the state cancels its contract with Highmark, it may have to refund to $600,000 to the insurance provider for marketing costs.
