BOSTON — Tufts Health Plan could become the second-largest HMO in Massachusetts after winning the deal to administer claims for state employees.
Tufts also has won the contract to insure employees at Bath Iron Works in Maine.
Tufts announced Wednesday that it had won a $50 million contract in Massachusetts that Blue Cross and Blue Shield of Massachusetts unsuccessfully bid to retain. Tufts will handle claims for 11,524 state employees and their dependents for the state’s Group Insurance Commission.
“This is a significant win for us,” said Jon Kingsdale, senior executive vice president of Tufts. “We could become the state’s second-largest managed care plan in 1998.”
The deal will bring Tufts closer to its goal of 900,000 members. Tufts, based in Waltham, ended 1997 with 822,000 members.
In addition to winning the state contract, Tufts took over the contract to insure employees at Bath Iron Works, the largest employer in Maine. That contract adds 22,000 members to Tufts.
Harvard Pilgrim Health Care, based in Brookline, is the largest HMO in New England with 1.2 million members. Blue Cross of Massachusetts is second largest with about 900,000 managed care members.
Tufts beat Blue Cross based on proposed administrative fees, said Dolores Mitchell, executive director of the Group Insurance Commission. Tufts said it would charge $24.37 per family each month, while Blue Cross proposed a fee of $32.31 a month. Harvard Pilgrim and Unicare Inc. also bid unsuccessfully.
The loss for Blue Cross comes at a time when the insurance company is trying to cut administrative costs and reorganizing to avoid paying federal income taxes for its HMOs.