Blue Cross NC formally protests award of State Health Plan contract | Eastern North Carolina Now

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

    On Thursday, Blue Cross Blue Shield of North Carolina (BCBSNC) submitted a 14-page formal protest to Sam Watts, acting administrator of the State Health Plan, opposing the award of the plan's 2025-27 third-party administrator contract to Aetna. BCBSNC held that contract for more than 40 years.

    In a letter accompanying the protest, BCBSNC asked that the State Health Plan either cancel its award of the contract to Aetna and instead award it to BCBSNC, or vacate the decision and start over with a new request-for-proposal process.

    In August, the State Health Plan issued an RFP for the third-party administrator of the plan and down-selected candidates to three possible vendors who met minimum requirements; Aetna, BCBSNC, and United Healthcare. From there, the three candidates submitted full proposals for evaluation by the SHP Board of Trustees. On Dec. 22, State Treasurer Dale Folwell announced that Aetna won the contract.

    Saying that the proposal evaluations were based on "arbitrary criteria and a distorted scoring system," BCBSNC's objections to the award centered on changes to the evaluation criteria since the 2019 RFP cycle. According to the submission Thursday, cost criteria changed from a 10,000-point scale to a 10-point scale. For the 310 technical questions in the RFP, answers could only be "yes/no." According to the protest, bidders were not allowed to submit narrative answers in 2022, as they were in 2019.

    In a December debrief, BCBSNC was informed its RFP was awarded 303 points for technical requirements, while Aetna and United Healthcare got 310. BCBSNC also said that its network of providers is 38% larger than that of Aetna in North Carolina.

    "The Plan took a complex decision - selecting the third-party administrator for a health plan that covers hundreds of thousands of North Carolinians - and tried to turn it into a checklist. That approach ignored critical issues that will affect the welfare of the State and the welfare of the Plan's members," BCBSNC wrote in the protest.

    BCBSNC also took issue with Folwell's description of the third-party administrator contract as a "back-office" role. North Carolina's State Health Plan for Employees is self-funded and serves more than 700,000 state employees and retirees.

    "The Plan's third-party administration is not a back-office function. Instead, the third-party administrator has responsibilities that play a central role in defining member benefits. The administrator must also deliver a provider network with the strength, depth, and reach to offer high-quality, accessible health care to Plan members."

    "We welcome the opportunity to engage in a factual, thoughtful, and transparent review of the State Health Plan's contracting process for third-party administration services going into effect two years from now," Folwell said in a prepared statement responding to the BCBSNC protest. "Just like Blue Cross Blue Shield of North Carolina has the right to point fingers at everyone else for losing the contract after 44 years, the State Health Plan, Board of Trustees, professional staff, and I all have a duty to seek the best financial value and member service for those that teach, protect, and serve as well as taxpayers like them."

    In the formal protest, BCBSNC also points out that the contract was awarded on Dec. 14, and on Dec. 15 and Dec. 20 the company submitted public records requests regarding the award process and has not yet received documents.

    "Blue Cross NC is proud of our long record of serving North Carolina's teachers, state employees, first responders, county and city employees, and their families," said Dr. Tunde Sotunde, president and CEO of Blue Cross NC. "State Health Plan members are more than customers, they are our neighbors, our friends, and our family, and we have filed this protest to ensure the best outcome for them, for taxpayers, and for our state."
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