The current provider of health insurance to North Carolina state workers has filed an appeal of a shift to a new provider beginning in two years.
State Treasurer Dale Folwell announced January 4 that trustees of the North Carolina State Health Plan have chosen to contract with Aetna for third party administrative services for nearly 740,000 teachers, state employees, retirees, current and former lawmakers, state university and community college personnel, and their dependents.
The new, three-year contract with Aetna would begin in 2025, ending service by Blue Cross Blue Shield of North Carolina after more than four decades.
In a press release announcing the protest, Durham-based Blue Cross NC cited “the simplistic (request for proposals), or bid process, which represented a significant departure from the State Health Plan’s previous procurement and contracting process. The protest highlights the limited information and distorted scoring system used during the decision-making process.”
“Blue Cross NC is proud of our long record of serving North Carolina’s teachers, state employees, first responders, county and city employees, and their families,” said Dr. Tunde Sotunde, president and CEO of Blue Cross NC. “State Health Plan members are more than customers, they are our neighbors, our friends and our family, and we have filed this protest to ensure the best outcome for them, for taxpayers, and for our state.”
Blue Cross NC’s said their “main concerns center around the implications for State Health Plan members’ health care, the new RFP process and scoring system, and the impact to North Carolina.”
UnitedHealthcare, which was also bidding on the contract, has filed a separate appeal of the decision.
“We welcome the opportunity to engage in a factual, thoughtful and transparent review of the State Health Plan’s contracting process for third party administration services going into effect two years from now,” Folwell said in a statement issued Friday.
“Just like Blue Cross Blue Shield of North Carolina has the right to point fingers at everyone else for losing the contract after 44 years, the State Health Plan, Board of Trustees, professional staff and I all have a duty to seek the best financial value and member service for those that teach, protect and serve as well as taxpayers like them,” Folwell said.
The News and Observer reports lawyers in the state treasurer’s office said details about the new contract and what led to the changes are being withheld due to a mandatory “silent period” that will remain in place until the appeals process is exhausted.
Implications for Members
State Health Plan members have expressed concerns about maintaining access to their doctors. Yet, the RFP process did not score each proposed vendor’s network of providers, and the process did not consider the possible disruption to members’ access to health care providers. Based on a preliminary review of publicly available information, Blue Cross NC’s statewide network of total provider locations appears to be 38% larger than Aetna’s. A smaller network could result in a significant number of teachers and state employees across the state to change doctors they’ve built relationships with for years and travel farther for in-network care.
Additionally, Blue Cross NC bid the lowest administrative fee of any bidder.
Simplistic RFP Process
The 2022 RFP process also failed to capture other critical information, by:
- Relying on simplistic yes/no questions and prohibiting explanations of capabilities or the ability to provide helpful context.
- For example, on cost issues, the 2022 RFP replaced the Plan’s 2019 more robust scoring method with vague standards. Specifically, the 2019 RFP evaluated cost based on a 10,000-point-scale, while the 2022 RFP used just a 10-point scale.
- Also, finalist presentations were not included in the 2022 RFP process.
- Oversimplifying the criteria used to assess the technical expertise of each company.
- For example, the 10,000-point-scale used in 2019 to rate technical expertise was reduced to just a 310-point-scale.
- Neglecting to appropriately weight requirements.
- For example, every response to a technical requirement was treated as identical in importance.
Impact to North Carolina
The 2022 RFP removed any preference for companies that have resources in North Carolina. As a North Carolina not-for-profit company, Blue Cross NC is headquartered in the state, supports North Carolina jobs and does not have shareholders. In fact, Blue Cross NC employs hundreds of North Carolinians directly serving the State Health Plan.
As part of its protest filing today, Blue Cross NC is releasing:
- the formal protest letter
- the 2022 State Health Plan RFP
- a chart that compares key features of the 2019 and 2022 RFPs
Additional documents and information relating to the decision have been requested through public records requests submitted to the State Treasurer’s Office on December 15 and December 20, 2022. The State Health Plan has not committed to a specific timeline for response.
“Blue Cross NC’s focus will remain on providing the highest level of service to the State Health Plan members it is honored to serve,” Sotunde said.
- August 20, 2022 – RFP issued by State Health Plan
- September 26, 2022 – Deadline set by RFP for vendors to submit responses to certain minimum requirements
- November 7, 2022 – Blue Cross NC, Aetna, and United Healthcare submitted proposals
- December 14, 2022 – State Health Plan notified Blue Cross NC that Aetna was selected as Third-Party Administrator
- December 15, 2022 – Blue Cross NC submitted first public records request
- December 16, 2022 – Post-award meeting with State Health Plan
- December 20, 2022 – Blue Cross NC submitted second public records request
- January 4, 2023 – Treasurer announced selection of Third-Party Administrator
- January 12, 2023 – Blue Cross NC submitted protest letter