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Aetna sues over N.C. Medicaid contract

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Insurer Aetna is still mad that state officials selected Blue Cross and Blue Shield of North Carolina among the five companies that will manage the N.C. Medicaid insurance program for low-income recipients. So Aetna filed a lawsuit in Wake County Superior Court this week after a state administrative law judge ruled against its year-old protest of the decision.

The matter involves expected annual government spending of  $30 billion over five years. It has been termed the biggest state contract in history under a program in which the state will pay a set monthly rate per Medicaid recipient to five companies:  AmeriHealth Caritas, Blue Cross and Blue Shield of North Carolina, UnitedHealth Group, Centene/WellCare and Carolina Complete Health.

Aetna’s bid was rejected in August 2019 by the N.C. Department of Health and Human Services in favor of the other groups.

Judge Tenisha Jacobs of the N.C. administrative hearings office ruled in the state’s favor this week — she had also done in mid-2019 —  and granted its motion for summary judgment, according to a statement from N.C. DHHS. “This means that all claims against the department … are resolved in favor of the department,” the agency said.

In its Wake County lawsuit, Aetna said it followed the N.C. Office of  Administrative Hearings’ protest process “regarding the state’s Medicaid program on several grounds, including, but not limited to, conflicts of interest between DHHS and certain awarded carriers, changes in the scoring process by DHHS to benefit certain awarded carriers, and DHHS’ attempt to conceal how scores were changed to benefit particular awarded carriers.”

The managed Medicaid program was expected to kick off last November but the health department pushed back implementation  because of the legislature’s stalemate over the state budget. It is now slated to take effect on July 1, 2021. State lawmakers authorized the change in 2015, saying the new approach will stabilize soaring Medicaid spending.

In its 40-page filing in September 2019, Aetna provided detailed criticism of the process with particular criticism aimed at state regulators and Blue Cross, the state’s dominant insurer.

Blue Cross says the process was unbiased.

Aetna’s filing noted that N.C. health department employee Amanda Van Vleet, who was on the evaluation committee, had “a long-term relationship and lives with a [Blue Cross] employee who serves as the director, healthcare strategy and transformation.” That executive was J.P. Sharp, who joined the insurer in 2018 after working for former Blue Cross CEO Patrick Conway when both were senior officials at the federal Medicare innovation office in Washington, D.C.

Conway and Sharp have both since taken jobs at Optum, a subsidiary of United Healthcare.

More than 2 million North Carolinians, or more than 20% of the state’s population, are enrolled in some facet of Medicaid.

Centene, one the of the company’s selected for the new Medicaid program, has announced plans to establish a North Carolina office that may add as many as 6,000 jobs.

Aetna is owned by drugstore chain CVS Health.

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