Blue Cross NC takes State Health Plan decision to court

Blue Cross Blue Shield of North Carolina is going to court to challenge the recent decision to move a major State Health Plan contract from Blue Cross to Aetna. A Blue Cross news release argues the plan and state taxpayers “will pay more” and “get less.”

The company filed paperwork Thursday with the state Office of Administrative Hearings and Durham County Superior Court. Blue Cross is challenging the State Health Plan’s decision to award its third-party administrator contract to Aetna for 2025-27. BCBSNC had held the contract for more than 40 years.

“The filing highlights the oversimplified and arbitrary bid process that resulted in a more expensive contract with a smaller network of providers,” according to a BCBSNC news release.

Blue Cross’ contract bid was $45 million lower than Aetna’s over the course of the three-year contract, according to the release. “Blue Cross NC’s proposal had the lowest administrative fees and tied for first on network pricing.”

The release also touted Blue Cross as providing the broadest network of 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.”

The legal complaint also emphasizes the State Health Plan’s “oversimplified” bid process, with an “arbitrary scoring process,” according to the release. The State Health Plan had issued a request for proposals before making its decision.

“The RFP relied on yes/no questions on 310 highly complex technical requirements and prohibited Blue Cross NC from providing explanations of capabilities or helpful context,” Blue Cross argued.

“We are disappointed, but not surprised that these legal challenges were taken,” said State Treasurer Dale Folwell, whose office oversees the State Health Plan. “We are looking forward to vigorously defending the unanimous decision of the State Health Plan Board of Trustees  — consisting of members appointed by the Governor, President Pro-Tempore of the Senate, Speaker of the House, and the Treasurer — to accept the recommendation of the Plan’s professional staff. We continue to be intently focused on the needs of our members who teach, protect, and otherwise serve the people of North Carolina and taxpayers like them.”

Blue Cross NC took legal action a week after Folwell released information about the bidding process.

Sam Watts, the plan’s interim director, addressed the issue of yes/no questions in the scoring process.

“The (BCBSNC) version required our staff to spend days if not weeks reading paragraph after paragraph of explanations as to why something or why someone should get partial credit for what we’ve now converted to a yes or no question,” Watts said. “This is a bit of an oversimplification, but when I go to a used car lot and I’m looking at two different cars, I’m going to ask, does the heater work on this one and if it doesn’t, it’s a yes-no question and you can kind of nuance say well, it’ll work three years from now when we get a part ordered or, but does the heater work or not?”

Folwell said that increasing quality and access and lowering costs for health care is something the State Health Plan thinks it has with Aetna. 

“I’ll just remind you what is in the Bible, and that is when you win, you should be humble,” he said. “I think Aetna has been humble in its winning, and no one likes a sore loser.”

Folwell announced on Jan. 20 that the State Health Plan had rejected appeals of the Aetna contract decision.

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