Blue Cross NC declines to appeal judge's decision on State Health Plan contract

Blue Cross Blue Shield of NC confirmed Monday it will not appeal a state Administrative Hearings judge’s decision to uphold the State Health Plan’s decision to award its third-party administrator contract for 2025-27 to Aetna.

The SHP is North Carolina’s largest purchaser of medical and pharmaceutical services. It covers nearly 740,000 teachers, state employees, legislators, retirees and their dependents. The treasurer’s office oversees SHP.

In December 2022, state Treasurer Dale Folwell disclosed the awarding of the three-year contract to Aetna, to begin Jan. 1, 2025. The contract has a renewal option for two, one-year terms.

The treasurer’s office said the administrative contract oversees health care spending of more than $17.5 billion over five years.

Blue Cross NC had 30 days from July 8 to appeal Administrative Law judge Melissa Lassiter’s final decision. The insurer said the decision not to appeal comes even though it is “disappointed in the outcome.”

“While we will continue to provide the highest level of service throughout the current agreement, we know that our relationship with North Carolina’s teachers, public safety officers, and state employees is guided by something far more meaningful than a contract,” Blue Cross NC said in a statement.

“Together, we share a vision of a better, healthier tomorrow and remain united by a common sense of purpose and commitment to the state we call home.”

Folwell said in a statement he is “pleased that Blue Cross NC is choosing not to appeal the well-reasoned opinion” from Lassiter.

“The members of the State Health Plan and taxpayers like them deserve to have this uncertainty ended. We will continue to be relentless in our pursuit of improving benefits for teachers and state employees in a cost-effective manner for taxpayers,” he added.

Blue Cross NC has held the administrative contract with the SHP since the early 1980s.

Judge’s decision

Both Blue Cross NC and UMR Inc., a wholly owned subsidiary of national insurer UnitedHealthcare, petitioned the N.C. Office of Administrative Hearings to rule on the SHP decision.

Blue Cross NC has said that SHP members and the public “deserved an independent review of the Plan’s process, which failed to select the bid that offered the lowest cost and the broadest network.”

Blue Cross NC and UMR have claimed the SHP altered its request for proposal procedures in ways that favored Aetna.

Lassiter said in her final decision order that she determined the SHP board of trustees acted appropriately, used proper procedures and acted as required by law or rule in scoring of the pricing-guarantee component of the insurers’ proposals.

“Separately, Blue Cross failed to demonstrate that any alleged errors by the plan ... substantially prejudiced its rights,” Lassiter wrote.

Jim Bostian, North Carolina market president for Aetna, said in a statement that since the contract decision was first announced, “we have been working on the impending, seamless transition at full speed, all while demonstrating in court that the transition to Aetna is in the best interests of the State Health Plan and its members.

“To date, over 800 Aetna employees have contributed nearly 60,000 work hours to this implementation. We are on schedule to begin serving the State Health Plan on Jan. 1 with our robust statewide network of providers in all 100 counties.”

Aetna, SHP road tour

The SHP and Aetna will conduct “an expansive road tour across the state to meet with members about the benefits and enhanced programs.”

The tour will run from July 25 through late October. The SHP’s 2025 open enrollment period is Sept. 30 through Oct. 25.

The locations and dates in the Triad and northwest N.C. are:

* Wilkes Community College, 11 a.m. to 3 p.m. Sept. 5 and 10 a.m. to 2 p.m. Sept. 26;

* Enterprise Conference and Banquet Center, Winston-Salem, 3-5 p.m. Sept. 26;

* Sheraton Greensboro Koury Convention Center, 9-11 a.m. Sept. 27;

* Randolph Community College, Asheboro campus, 11 a.m. to 3 p.m. Oct. 4;

* Forsyth Technical Community College, 11 a.m. to 3 p.m. Oct. 8;

* AVS Catering and Banquet Centre in Asheboro, 3-5 p.m. Oct. 8;

* Guilford Technical Community College, Jamestown campus, 11 a.m. to 3 p.m. Oct. 9;

* Alamance Community College, Graham campus, 11 a.m. to 3 p.m. Oct. 10.

Folwell response

Folwell said in a statement Monday that “from the beginning, it has been clear that the State Health Plan performed a well-reasoned, high-integrity and correct procurement process for third-party administrative services.”

“This process clearly revealed that Aetna’s bid was superior to Blue Cross NC’s, and the Plan’s board of trustees properly approved the contract’s award to Aetna.”

Folwell said that “unfortunately, Blue Cross NC was a sore loser in thinking that it was entitled to nearly a half century monopoly on the State Health Plan’s business.

“They decided to try a ‘sue till you’re blue’ strategy, costing the state over $1 million in legal fees, for which taxpayers would welcome a reimbursement from Blue Cross NC.

“Thankfully, Judge Lassiter saw through their legal gymnastics,” he said. “We’re also working hard to ensure that open enrollment, beginning in October, goes well and the transition will be seamless for our members.”

Both SHP officials and Folwell have said the third-party administrator request for proposal process was conducted within the parameters of “rapidly increasing health-care costs, funding that has not increased at the same rate, and the aging and declining health of the Plan member pool (due in part to the inability to attract young and healthy dependents into the Plan because of high family premiums).”

They said because the SHP is facing a $4.2 billion funding gap over the next five years, “this is an existential threat to the Plan.”

“The treasurer and the SHP board have made it the Plan’s explicit policy to cap or reduce the Plan’s costs and implement strategic initiatives that will enable the Plan to lower dependent premiums to attract younger, healthier members to the Plan.”

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