Friday, March 6, 2020

Treasurer Folwell Announces Contract Award for Third Party Administrator for State Health Plan Members New Contract to Generate $170M in Savings

Mar 6, 2020


(Raleigh, N.C.) – State Treasurer Dale R. Folwell, CPA, and the State Health Plan (Plan) today announced the award of Third-Party Administration Services to Blue Cross and Blue Shield of North Carolina (Blue Cross NC). The Plan consists of more than 727,000 participants, which is equal to the combined domestic employment of Berkshire Hathaway, J.P. Morgan and Amazon.

The contract, awarded today by the State Health Plan Board of Trustees, is worth $9.4 billion and will run from 2022 to 2024. The potential annual administrative cost savings under the new contract will be approximately $37 million annually, which over the course of the three-year contract equals $110 million. The total potential Plan savings also includes additional network savings of $60 million over the same three-year period, thus achieving the $170 million in savings. 

The award is the result of a Request for Proposals (RFP), a competitive bid process in which the Plan solicited and selected industry-leading partners providing exceptional customer service, technological resources and professional support. The services under the contract cover processing claims, premium billing services and a network of health care providers, which includes  providers that are part of the Plan’s Clear Pricing Project (CPP). Blue Cross NC is the current TPA for the Plan.

“The savings this contract generates will place us on a more sustainable path,” said Treasurer Folwell. “I look forward to working closely with the Blue Cross NC Board of Trustees on our continued relationship as we look ahead to improve transparency and lower health care costs for our Plan members who teach, protect and serve.”

Blue Cross NC was one of three companies bidding for the contract. Aetna and United Medical Resources, which is a subsidiary of UnitedHealthcare, also submitted proposals. 

“I applaud the Plan staff for completing a months-long, fully transparent and rigorous procurement process that paved the way for this award,” said Dee Jones, State Health Plan Executive Director. “Their hard work and dedication during the procurement process has paid off and the Plan and our members will be able to reap the benefits,” continued Jones. 

Blue Cross NC will also administer the State Health Plan Network (CPP) created in 2019. The network consists of 25,000 medical providers that have agreed to transparent medical pricing based on a significant percentage above Medicare reimbursement rates. In addition, the Plan is looking for ways to build on that transparency while looking for new approaches to providing accessible, quality care at lower cost for members and taxpayers like them. 

“The employees of Blue Cross NC are excited to continue serving our state’s teachers and state employees,” said Interim CEO and Chief Operating Officer Gerald Petkau. “We look forward to working with Treasurer Folwell and the SHP leadership team to deliver quality, affordable health care.”

The contract will extend for three years to 2024, at which time the Plan will review the performance of Blue Cross NC and decide on whether to issue another RFP or extend the contract in two, one-year renewals for a total of up to five years.

The State Health Plan, a division of the Department of State Treasurer, provides health care coverage to more than 727,000 teachers, state employees, retirees, current and former lawmakers, state university and community college personnel, and their dependents.