Three strikes! BlueCross is out, Aetna is in

(The Center Square) – Appeals, covert work by Gov. Roy Cooper and the litigation effort of BlueCross and BlueShield of North Carolina have all failed.

Third-party administrative services for the State Health Plan will remain headed to Aetna following a Monday ruling at the Office of Administrative Hearings. State Treasurer Dale Folwell said he looked forward to the state’s 740,000 members partnering with Aetna when the contract begins Jan. 1.

The Republican gubernatorial candidate said earlier the change is expected to save state taxpayers about $140 million . The plan provides health care coverage to teachers, state employees, retirees, current and former lawmakers, state university and community college personnel and their dependents.

The contract was awarded by unanimous decision of the State Health Plan Board of Trustees, which oversees $17.5 billion in health care spending over five years.

In her ruling, Judge Melissa Owens Lassiter wrote in part the “preponderance of the evidence showed that the Plan conducted the procurement carefully and thoughtfully, fairly and in good faith, and that its decisions were properly within its discretion.”

Folwell in a release said, "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."

In the bid process, two plans were rejected , one from longtime partner BlueCross and another from United Medical Resources. Both appealed. Sam Watts, interim executive administrator of the North Carolina State Health Plan, wrote an 11-page letter to each saying the appeal position is “without merit and am therefore denying your requests.”

In December, Folwell said he learned of Cooper’s intent to shift the Office of State Human Resources’ NCFlex enrollment program away from the existing platform to a contract with the UNC System without notifying the State Health Plan for Teacher and State Employees. That’s required through a memorandum of agreement with the State Health Plan, and Folwell rejected the change.

“We had no knowledge this was going on,” Folwell said in December.

He said the state Human Resources office didn’t tell him; rather, third parties did ask “what is this all about?”

Melody Hunter-Pillion with the Office of State Human Resources, in an email to The Center Square, said there was no "secret plan" and the intent is to make enrollment better and save taxpayer money.

The NCFlex plans, which offer supplemental benefits to cover things like pretax child care, vision, dental, and accident insurance, are aligned on a calendar year basis, and the planned shift to the new system in mid-2024 would “torpedo the open enrollment process” the State Health Plan had worked to streamline over the last seven years, Folwell said.

The transition would also wreak havoc on the State Health Plan’s work to transition from BlueCross BlueShield of North Carolina to Aetna for its third-party administrator.

Of vendors’ proposals, Owens ruled they were “evaluated and scored carefully, accurately, and fairly by the Plan and Segal as the Plan’s contractor, and that to the extent the Plan relied on Segal’s analyses and recommendations, that reliance was in good faith and properly within the Plan’s discretion. Separately, BlueCross failed to demonstrate that any alleged errors by the Plan or Segal substantially prejudiced its rights.”

Aetna employs twice as many North Carolinians as BlueCross and provides similar services for Durham County’s two largest employers – the city, and Duke University.