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State Health Plan rejects appeals of switch from BCBSNC to Aetna

Blue Cross and Blue Shield of North Carolina main campus in Durham.
Blue Cross and Blue Shield of North Carolina main campus in Durham.

The N.C. Treasurer's office rejected two appeals of its decision to award the State Health Plan's administration contract to Aetna.

Earlier this month, the treasurer announced it chose Aetna to be the plan's third party administrator, the entity that processes claims and does other administrative duties for the health insurance plan that covers 740,000 state employees, retirees, and their dependents. Blue Cross and Blue Shield of North Carolina held the contract for more than 40 years and appealed the treasurer's decision to switch. UMR, a subsidiary of United Healthcare, also appealed. That appeal was also rejected.

BCBSNC said the scoring process the treasurer's office used to make its decision was arbitrary and that a switch would cause disruptions to plan members who might have to find new providers. State Treasurer Dale Folwell sharply rejected those assertions, noting that the State Health Plan is governed by the plan's Board of Trustees, which sets premiums, co-pays, and deductibles. A third party administrator, whether Aetna, BCBSNC, or any other carrier, performs only administrative work and is not the insurer.

"It's embarrassing to see entities trying to confuse our members by falsely advertising information regarding Plan benefits, which only leads to unnecessary member confusion," Folwell said in a press release announcing the appeal rejections.

He added: “Aetna has a national network. Aetna has already begun a robust effort to recruit even more providers, which will only continue over the next two years.”

The current contract with BCBSNC runs through 2024, and Folwell said the plan and Aetna have nearly two years to prepare for a transition. Aetna is already the third party administrator for the city of Durham and Duke University.

In its appeal, BCBSNC said the RFP "failed to capture other critical information by relying on simplistic yes/no questions and prohibiting explanations of capabilities or the ability to provide helpful context."

As an example, the RFP in 2019 used a 10,000-point scoring scale, while this recent one used only a 10-point scale.

In rejecting the appeal, State Health Plan Interim Executive Director Sam Watts dismissed complaints about the RFP.

"Responding to an RFP is completely voluntary. Arguing that if the questions were asked in a different way or graded differently the outcome would have been different is not how procurement works," he Watts said.

Jason deBruyn is the WUNC health reporter, a beat he took in 2020. He has been in the WUNC newsroom since 2016.
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