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Friday, March 1, 2024

Aetna’s N.C. leader has deep experience in state health care

Almost everyone in North Carolina may have been surprised that Aetna won the contract to administer the State Health Plan for 740,000 state employees, retirees and dependents, starting in 2025. But Jim Bostian wasn’t.

The bigger surprise, he says, is that Aetna didn’t win four years ago when officials opted for Blue Cross Blue Shield of North Carolina, which has held the contract for more than 45 years. “We were extremely excited about our previous bid,” he said. “We had a lot of confidence we were going to win.”

Jim Bostian

That confidence stems from Bostian’s 35 years of working in North Carolina’s health insurance industry. During a career working for several industry giants, the Salisbury native says he’s gotten to know most of the state’s key hospital administrators. He worked for Duke University Health Systems over two stints.

A UNC Chapel Hill graduate, Bostian rejoined Aetna as market president for the Carolinas, Arkansas and Tennessee in 2015. He has since added the Washington, D.C., Virginia and Maryland markets. He had worked for the Hartford, Conn-based insurer from 2005-2013 in the Triangle, overseeing its provider network. He also has had jobs with insurance giants Cigna and UnitedHealth Group.

Aetna is part of CVS Health, a health care services company with a huge insurance arm, a 9,600-store retail network and other medical-oriented holdings. The company employs 325,000 people, including CVS store workers. About has several thousand N.C. staffers work for Aetna, mainly at Cary and High Point offices.

The State Health Plan contract is controlled by a 10-member board of trustees led by State Treasurer Dale Folwell. It spends nearly $3.5 billion annually on member claims that have been processed for decades by Durham-based Blue Cross.

The insurer and plan officials got crossways in recent years because of computer issues that have affected customer service. Folwell often rails about the plan’s long-term unfunded liability, which was about $23.5 billion as of last June 30. That reflects the state’s pledges to plan members that isn’t currently funded.

At the plan’s February board meeting, Folwell and plan director Sam Watts said more effective service is expected from Aetna, which was chosen despite Blue Cross’ broader provider network. Bostian notes more than 98% of Blue Cross NC’s claims are from providers in Aetna’s network.

Watts has rejected protests by Blue Cross and UnitedHealth, which also made a bid, over the contract award. The Blue Cross bid’s administrative costs was $17 million less than Aetna’s, but plan officials favored Aetna for technical reasons. Blue Cross has protested with the case pending in Durham County Superior Court.

Folwell says increased efficiency by providers and a focus on better fitness that leads to lower claims can lower premiums. The plan’s members now often pay $600 or more a month for family coverage, which is too expensive for many households, he says.

Bostian told the plan’s board that Aetna’s “goal is to delight members” and provide better customer service while holding down expenses. “We have no choice but to drive transparency and lower costs,” he said. “Those words from the treasurer are our mantra.”

Aetna is committed to administering Folwell’s Clear Pricing Project that gives the plan and its members greater details on provider charges, Bostian says. N.C. hospitals have generally declined to provide that data to the plan, citing the need for confidentiality.

Folwell said, “We expect great progress on the commitments we heard today. There’s no room for error.”

Beyond insuring consumers directly or as a third-party administrator, CVS Health also wants to treat them. In February, the company paid $10.6 billion for Oak Street Health, a Chicago-based company that operates 169 primary-care offices with 600 doctors in 21 states. By 2026, CVS Health expects to have more than 300 centers, which create competition with primary care practices that are increasingly owned by hospital systems.

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.

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