State Health Plan brings back Blue Cross NC, approves Novant and UNC Health deals

The Board of Trustees for the State Health Plan approved Friday sweeping management and beneficiary changes that include bringing back Blue Cross Blue Shield NC as its third-party administrator in January 2028.

The board chose Blue Cross NC over the current third-party administrator Aetna, which also bid for the contract. Aetna's contract expires on Dec. 31, 2027.

Blue Cross NC was awarded the contract for Pharmacy Benefit Manager, also effective Jan. 1, 2028. Both Blue Cross NC contracts run through at least Dec. 31, 2031, with two optional one-year renewal periods.

The SHP is North Carolina's largest purchaser of medical and pharmaceutical services. It covers nearly 750,000 teachers, state employees, legislators, retirees and their dependents.

Open enrollment for 2027 is from Oct. 12 to Oct. 30.

The board approved preferred provider contracts with Novant Health Inc. and UNC Health that take effect on Jan. 1, as well as 2027 premium rates for members.

"This is a monumental step in the right direction for the Plan and the people we serve," Treasurer Brad Briner said in a statement. The state Treasurer's Office oversees the SHP and Briner serves as board chairman.

"For decades, health care costs have risen faster than funding, creating increasing pressure on our public servants, taxpayers and the Plan itself," Briner said.

"Our members deserve for us to fight for them. Affordability, improved access to high-quality care and more sustainability for Plan mean better health care and better health. These actions do just that."

Third-party administrator switch

In December 2022, then-Treasurer Dale Folwell made a controversial decision to switch from Blue Cross NC to Aetna as third-party administrator.

At that time, Blue Cross NC had held the administrative contract with the SHP since the early 1980s.

Briner made clear in his first months as treasurer that he would put his fingerprints on the SHP's operations.

In March, Briner said he supported the board starting early the process of determining its next third-party administrator. At that time, the treasurer's office said "this (Briner) administration has different priorities and would prefer a contract that is more in line with those priorities."

The SHP board said Blue Cross NC's bid "gives the Plan the opportunity to save up to a $1 billion dollars over the life of the contract through deeper discounts and value-based payment opportunities on top of our Preferred Provider Strategy."

The board said "multiple vendors submitted proposals across the three pharmacy benefit manager modules.

"Following the evaluation, Blue Cross NC was the only vendor to meet all minimum requirements established by the Plan," the board said.

Aetna spokesman Phil Blando said the insurer "continues to believe Aetna is the strongest partner for the State Health Plan."

"Aetna has been a trusted partner in North Carolina for decades, and that commitment remains steadfast in continuing to support the Plan and its members through the end of the current contract.

"We will review this decision in the coming weeks and decide how best to move forward."

Preferred provider hospitals

Novant and UNC Health, as part of winning the preferred provider hospital contracts, agreed to provide discounted rates and collaborate with the Plan "to improve the health of our members and lower the total cost of care" for members.

The SHP board said it chose the two not-for-profit systems because they both "provide broad statewide reach through extensive networks of hospitals, physician practices, specialty providers and outpatient facilities."

Novant has a major presence in the Triad, primarily in Forsyth County, as well as Charlotte and Wilmington. It has received state health regulatory approval to open a community hospital in the Asheville area.

UNC Health has a major presence in the Triangle, along with in Boone, Clayton, Eden, Goldsboro, Hendersonville, Hillsborough, Kinston, Lenoir, Linville, Lumberton, Morganton, Rocky Mount, Siler City, Smithfield and Valdese.

About 70% of care for SHP participants takes place at facilities in 10 counties with Forsyth and Guilford counties ranking fifth and seven, respectively. Catawba County was ranked ninth.

Novant and UNC Health "ensure members across North Carolina have access to high-quality, lower-cost care options," the board said.

In March, Novant signed on to participate in "an innovative, high-value no-cost surgical benefit" initiative involving the SHP.

Plan members have access to Lantern-designated surgical services at Novant locations across the state, such as orthopedics, spine, bariatrics, general surgery, heart and vascular care and women's services.

The "no cost" in this instance signifies the SHP will cover the surgical cost for members that they normally would be responsible for under the typical preferred provider organization (PPO), such as currently with Aetna and Blue Cross.

2027 premium rates

The Board approved 2027 premium rates, based in response to the Republican-controlled General Assembly providing a record nearly $4 billion in the 2025-27 state budget to the SHP.

Active members will have a monthly increase ranging from less than $2 to around $8 for individual coverage, and less than $29 to $42 per month for family coverage.

However, the board cautioned that "continued growth in health care costs threatens the financial stability of the Plan, which still has a financial gap of $58 million looming in 2027."

"The increase is also consistent and proportionate with salary increases. The salary-based premium structure implemented in 2026 will remain in place, helping reduce the financial burden on lower-paid employees while ensuring the Plan remains adequately funded."

Beginning Jan. 1, health care providers will be categorized as preferred, access, non-preferred or out-of-network.

Members who use preferred providers with Novant and UNC Health will have lower deductibles, out-of-pocket maximums and copays than what they are currently paying.

Meanwhile, access providers will help ensure members continue to have access to affordable care in rural and underserved communities. Access providers are considered as cost neutral for members to current costs, or in some cases may have lower out-of-pocket costs.

Members who choose to see a non-preferred provider will see a significant out-of-pocket cost increase.

"As we've witnessed, the status quo is not sustainable; we have to try something different," SHP executive administrator Tom Friedman said.

"We decided to break the health care mold this year and create competition for providers and incentives for members. The tiered network strategy we're implementing places us on a more stable financial footing."