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LOSING BIDDER FIGHTING DECISION

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SACRAMENTO, Calif. -- The planned privatization of California's small group health insurance purchasing pool is being held up by a losing bidder on the management contract.

The board overseeing the Health Insurance Plan of California awarded the pool's first private-sector management contract to the Pacific Business Group of Health. The PBGH is one of the largest employer coalitions in the country, negotiating health care coverage for 34 employers in California.

However, the contract award is being challenged by Provider Choice Inc., a Sacramento, Calif.-based non-profit organization coincidentally headed by John Ramey, the first executive director of the HIPC.

A total of three non-profit organizations responded to the request for proposal the state Managed Risk Medical Insurance Board issued in May, according to Dennis Gilliam, contracts administrator for the MRMIB in Sacramento. The MRMIB oversees the HIPC.

Also responding to the RFP was the Foundation for HealthCare Advancement based in Roseville, Calif.

The RFP process was prescribed under the 1993 legislation that created the purchasing pool, Mr. Gilliam explained.

"The HIPC law provided for the eventual privatization of management," he said.

A Sept. 21 hearing date has been set by the state Department of General Services, which oversees the the MRMIB, to review the Provider Choice challenge. The department will issue its ruling on the contract award within 30 days after that.

The HIPC offers California employers with two to 50 employees a choice of 24 health plans and seven dental plans. Currently, about 140,000 people receive coverage through the HIPC.