State Treasurer Dale Folwell’s team released public records Tuesday that detailed how Blue Cross Blue Shield of North Carolina lost its contract administering the State Health Plan. The Durham-based insurer had handled the account for more than four decades.
After speeding up the new bidding process as a result of problems with a new Blue Cross software system, the State Health Plan’s administrators drastically changed the scoring process. Detailed answers scored by staff in the state treasurer’s office were replaced by simple yes-or-no answers about each company’s capabilities. When the numbers were compiled from each bid, the scores were close.
While Folwell touted the new contract with Aetna as a $140 million “potential administrative cost savings” over five years, Blue Cross’ bid was actually the cheapest of the three overall – but not by much.
Aetna’s bid came with a total projected five-year price tag of $17.52 billion, about $17 million more than the total for Blue Cross. Blue Cross offered the lowest administrative fees, while Hartford, Conn.-based Aetna offered the lowest overall cost for claims. And because the total numbers were so close, the State Health Plan treated the outcome as a tie.
But Blue Cross lost out to Aetna on the “technical” side of the evaluation, which looked at things like “customer experience,” claims processing and “network management.”
In a briefing with reporters Tuesday, interim Health Plan executive director Sam Watts highlighted several examples of where Blue Cross fell short:
- The North Carolina-based company doesn’t have the same payment rules across all states, which Watts argued is a problem for state employees and retirees who see medical providers in other states.
- Blue Cross sometimes will pay claims for out-of-network services directly to patients, who are then expected to pay the provider themselves. Folwell’s presentation linked to an article about a patient experiencing an addiction who got a $33,000 check, used it to buy drugs, and died.
- Blue Cross didn’t commit to using the same member ID numbers for an array of purposes. Watts pointed to current Health Plan ID cards that list multiple ID numbers, which he says can lead to software problems like the ones the plan experienced last year.
For its part, Blue Cross released a statement that took issue Tuesday’s document release.
“It is critical for the public to understand how costs and access to care for teachers and state employees will be impacted by the change,” spokeswoman Sara Lang said in an email. “We are disappointed that, despite our records requests in December, the Plan has not revealed key details on how it assigned scores to each vendor’s proposal.”
Blue Cross has said hundreds of jobs may be shed because of the change, which takes effect in 2025. Watts noted that Aetna and its owner, CVS Health, employ more than 10,000 people in North Carolina, more than twice the number employed by Blue Cross.
A request for Folwell’s spokesman to explain where the $140 million savings figure came from was not immediately answered Tuesday.
The State Health Plan board unanimously approved the staff’s recommendation favoring the Aetna bid, Folwell said.
