Province Signs 10-Year Contract with Medavie Blue Cross

A new, 10-year contract with Medavie Blue Cross is a good deal for Nova Scotians, says Health Minister Angus MacIsaac.

Medavie Blue Cross will administer the province's Medical Services Insurance (MSI) and Pharmacare programs under a new agreement, effective Aug 1.

"It was important to develop an agreement with clear expectations, performance standards, and penalties, which were lacking in the previous contract," said Mr. MacIsaac. "As we move forward, we are supporting information technology enhancements, reducing financial risk to taxpayers, leaving the door open for enhancing programs down the road, and keeping jobs in Nova Scotia."

The Department of Health has been doing business with the company since Medicare was introduced in 1969. The contract was last negotiated in 1992 and expired April 1, 2004. An extension was granted until a new contract was negotiated.

Today, Medavie Blue Cross administers about $650 million worth of transactions each year for the Nova Scotia Department of Health including paying doctors, and administering several pharmacare and ancillary programs, like the seniors pharmacare program and the prescription monitoring program. The company also registers all residents for their Nova Scotia health cards. Last year, the province paid Medavie Blue Cross $8.35 million to provide these services.

"This new contract is a milestone in the history of Medavie Blue Cross, renewing our successful long-term relationship with the province of Nova Scotia," said Paul Dowie, chief operating officer, Medavie Blue Cross. "We look forward to fulfilling our service agreement and project commitments on behalf of this valued customer."

The contract has a five-year initial term with a three-year automatic renewal, two one-year automatic renewal options and an estimated one to two-year transition period and is performance-based. There are 29 specific service level requirements that Medavie Blue Cross must achieve in key program areas.

The province will pay an estimated $10.4 million per year for the Medavie Blue Cross services. The fixed administration costs are $6.2 million per year in years one to four, and $5.6 million per year in years five to 10. Variable costs are estimated at $4.2 million per year and will fluctuate depending on transaction volumes. The contract allows for annual operational increases, which will be determined using CPI and Nova Scotia wage adjustment factors.

Under terms of the deal, Medavie Blue Cross will transfer a number of Department of Health services to its new corporate information technology system. Included in this, Medavie Blue Cross will take over, stabilize, and renew any existing Department of Health-owned information systems and software used in the provision of medicare (MSI) and pharmacare services. The department will pay a maximum of $15 million over the life of the contract toward Medavie Blue Cross's plan to develop the new IT system.