State Treasurer Dale Folwell said in a news release that the Health Plan’s governing board has awarded a three-year contract to Aetna starting in 2025. That means 740,000 teachers, state employees, retirees and their dependents will have a new insurance provider, and Durham-based Blue Cross will lose a significant percentage of its business, potentially leading to layoffs.
Folwell’s news release says the new contract “focuses on transparency and lower costs, with the potential administrative cost savings over the course of the contract equaling $140 million.”
Details on exactly how Aetna’s bid compared to Blue Cross and a third bidder, UnitedHealth, weren’t available Wednesday. A spokesman for Folwell said requests for the documents would be handled through the public records request process; those documents hadn’t yet been released as of late Wednesday.
Blue Cross has also filed public records requests and is planning a formal appeal, spokeswoman Sara Lang said Wednesday. She said the insurer is “deeply disappointed” by the move and that it “threatens North Carolina jobs.” Hundreds of jobs across the state are tied to the State Health Plan contract, she added.
As with any insurance company switch, the change raises questions of whether state employees will have access to a comparably large provider network under Aetna. The Connecticut-based company doesn’t currently offer plans in all 100 North Carolina counties.
Treasurer’s office spokesman Frank Lester said that Aetna’s response to questions about its provider network “met the needs of the State Health Plan. During the implementation process there will be a disruption analysis completed. Aetna is committed to providing as little disruption as possible.”
The move to Aetna will also mean that the Health Plan will be using an affiliated company, Caremark PCS Health, as its pharmacy benefit manager. Both are owned by CVS Health.
“To alleviate any concerns, the State Health Plan insists that there is always a firewall between companies for any vendor that serves other lines of business,” Lester said. “This ensures that the two lines of business are not in conflict.”
The decision to switch Health Plan administrators was actually made during a closed-session board meeting back on Dec. 14. It was a highly secretive process, with board members and staff members involved required to sign non-disclosure agreements.
“The decision to delay the announcement was mainly to avoid any member confusion prior to a new benefit year starting on Jan. 1,” Lester said.
Folwell’s announcement says that 600 Aetna employees will begin work on the transition this week. But the switch comes at a period of transition for the Health Plan’s leadership too: Health Plan executive director Dee Jones left her job on Dec. 16, two days after the meeting. She started a new position with the IT firm CGI starting this month, according to her LinkedIn page.
Sam Watts, the longtime legislative liaison for the treasurer’s office, is doing double duty now as interim executive director for the Health Plan while keeping his legislative responsibilities.
SEANC, which represents state employees, will be closely watching the transition. “This change will save $140 million, which is a lot of money,” executive director Ardis Watkins said. “But bringing true price transparency and savings to what the plan pays out to hospitals is required to achieve the savings the plan needs to survive. … Our ultimate goal is that our members can continue to see the providers they want, but pay less. We will be working over the next two years to make sure that happens.”