Aetna awarded State Health Plan contract, ousting Blue Cross Blue Shield NC | Eastern North Carolina Now

    Publisher's Note: This post appears here courtesy of the Carolina Journal. The author of this post is Theresa Opeka.

    Blue Cross and Blue Shield of North Carolina will no longer be the third-party administrator for the State Health Plan come Jan. 1, 2025. According to a press release by North Carolina state Treasurer Dale Folwell, Aetna has been awarded the Third-Party Administrative (TPA) Services Contract for the Health Plan. Aetna beat out BCBSNC and UMR, a health insurance company based in Wisconsin.

    The change is significant because BCBSNC has been the TPA for more than 40 years. Blue Cross NC says that it will pursue a formal appeal of the decision.

    "It is an honor for Blue Cross NC to serve North Carolina's teachers, state employees, and their families," the BCBS statement read. "We are deeply disappointed by the State Health Plan's decision last month. This is a consequential decision that will impact more than 580,000 State Health Plan members and threatens North Carolina jobs. Blue Cross NC is pursuing a formal appeal and seeking more information through a public records request to ensure the best outcome for North Carolina and all State Health Plan members."

    Folwell told Carolina Journal in a phone interview Wednesday that potential contractors were asked to bid based on the same set of rules, and considerations included cost saving and technical requirements to keep the SHP solvent.

    "We have no choice but to drive transparency, higher quality, higher access, and lower cost into our state health plan," he said.

    Folwell said the selection followed a Request for Proposals, a competitive bid process in which the plan solicited and selected industry-leading partners who reported exceptional customer service, technological resources, and professional support. The services under the contract include processing claims and offering a comprehensive network of healthcare providers.

    In a press release, the Treasurer's office characterized the deal with Aetna as a "partnership that focuses on transparency and lower costs." The press release also said there are potential administrative cost savings of $140 million over the life of the five-year contract.

    In August, Folwell shared his concerns about healthcare costs going up, including the possibility that contracts will be renegotiated upward next year.

    "I am very concerned that the State Health Plan is going to need $5 billion more incremental dollars over the next several years in order for it to remain solvent," he said. "This was part of the unfunded healthcare liability (that I have talked about for the past 12 years), and that is what we are facing right now."

    He also said a letter was recently sent to the lawmakers at the General Assembly telling them about the billions of dollars of future financial needs of the SHP.

    "We have done all we can," Folwell said. "We have renegotiated our Medicare Advantage contract at $0 cost to the taxpayer and zero premium to the members. We have renegotiated our pharmacy contract and a savings of $800 million over three years."

    The plan provides health care coverage for nearly 740,000 teachers, state employees, retirees and their dependents. The administrative contract, awarded by the State Health Plan Board of Trustees, oversees healthcare spending of more than $17.5 billion over five years.

    In September of 2011, there were already concerns about the health of the State Health Plan, after North Carolina state Auditor Beth Wood commented in a performance audit of the plan. According to the audit obtained by C.J. from Folwell's office, Wood's statements said the plan was at risk for overpaying claims.

    "It must rely solely on BCBSNC auditors and information from the BCBSNC computer system to identify discount errors," Wood's statement read. "Because the Plan does not have access to contracts between BCBSNC and the medical providers, the Plan does not have a method for independently determining if an improper discount rate has been applied to a Plan member's claims."

    Folwell has made pricing transparency and cost reduction in healthcare a centerpiece of his tenure as treasurer and, in recent months, has indicated his interest in running for governor in 2024. He has continued a battle with N.C. hospitals over profits from Medicare and COVID relief funds, using terms like "healthcare cartel" to describe the N.C. Healthcare Association. He's also pushed lawmakers to pass a Medical Debt De-Weaponization Act, which would limit interest rates and collections on medical debt.

    The three-year initial service period for the contract with Aetna begins Jan. 1, 2025, and continues through Dec. 31, 2027, with the option to renew for two one-year terms.

    "Partnering with Aetna, which already employs over 10,000 people in North Carolina, will create a lot of new opportunities for the Plan and the members we serve," Folwell said in the press release. "A change of this magnitude is a great opportunity for a fresh perspective, and we look forward to working closely with Aetna to create new ways to provide price transparency, increase access and quality while lowering the cost of health care for those who teach, protect and serve, and taxpayers like them."

    Starting Wednesday, nearly 600 Aetna employees have been assigned to work on the transition with State Health Plan director Sam Watts for the next two years.

    Plan members will start receiving more information regarding the changes in 2024 before open enrollment for the 2025 benefit year.

With the Midterm Elections less than one week away: What do you consider the top issues that you will be voting on to be corrected by your better representation?
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  Inflation created by Legislation of Majority in Power
  Gender Reassignment
  Corrupted Bureaucratic /Service (DOJ, FBI, etc.) Institutions
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  Ending the Corruption of Dishonest Politicians
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  Wide Open Southern Border
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