UnitedHealthcare has launched a protest of the apparent award of the state employees health benefits contract to Blue Cross and Blue Shield of Georgia, according to an AJC report Thursday.

The AJC article says that United has alleged that the Department of Community Health held a secret bid that kept the Minnesota-based company from competing for the business.

The State Health Benefit Plan (SHBP) covers more than 650,000 state employees, teachers, school personnel, retirees and dependents. Currently, United and Cigna hold the contract, with United covering more than 90 percent of members.

Community Health had been expected to announce the winner of the new contract early in July. The winner would begin serving members Jan. 1.

Speculation on the winning bidder had centered on a single vendor — Blue Cross, the state’s largest health insurer.

Some industry officials told GHN recently that they fear that Blue Cross’ reimbursements for services will be lower than the current rates, and lead to a financial squeeze for some medical providers.

Community Health on Wednesday released a “notice of intent to award” the contract to Blue Cross, the AJC’s James Salzer reported.  The agency allows 10 days for unsuccessful bidders to respond, then can award the contract.

“In what has to be one of the most egregious examples of a state entity acting outside the boundaries of Georgia procurement law, the Department of Community Health … is conducting a secret, hidden procurement,” says a protest filed by UnitedHealthcare, according to the AJC.

Bert Kelly, a spokesman for Blue Cross, said in an email to GHN on Thursday,  “We submitted our proposals in accordance with all Georgia Department of Community Health, State Health Benefit Plan rules and regulations.   As of this e-mail, we are aware of the notice of intent to award that was posted to the DCH site.”

The AJC reported that United’s protest said Community Health held separate bidding through a private contractor and only invited companies with a password could go on the contractor’s web site and bid, according to the protest.

The agency this week acknowledged that it set up a separate bid and that some potential bidders, including Cigna and United, were not offered the chance to present a proposal, the AJC reported.

Asked why the department staged a second bid, a spokeswoman wrote in an email that Community Health wanted “to solicit a response from a regional vendor to fulfill the state’s request for a potential contract for health coverage within certain geographical, cost and plan design requirements,” the AJC article reported.

Asked for clarification, the spokeswoman replied that the agency was “looking into the process” and couldn’t comment further.

UnitedHealthcare’s protest said Community Health went “rogue” and “overstepped its authority” in not holding open bids for the contracts, the AJC said.

Blue Cross has moved aggressively in the Georgia market over the past few months. The company signed up to cover Georgians in the upcoming state insurance marketplace — part of the health reform law — and created a physician quality incentive plan in Athens, Rome, Columbus and Savannah.

The SHBP contract would give Blue Cross even more clout than it has now in dealing with medical providers in Georgia, experts say.