Monday, July 8, 2024

Treasurer Dale R. Folwell, CPA, Comments on State Health Plan Victory Over Blue Cross NC on Third-Party Administrator Contract

Raleigh, NC
Jul 8, 2024

Statement from Treasurer Folwell:

From the beginning, it has been clear that the State Health Plan (Plan) performed a well-reasoned, high-integrity, and correct procurement process for third-party administrative services. This process clearly revealed that Aetna’s bid was superior to Blue Cross NC’s, and the Plan’s Board of Trustees properly approved the contract’s award to Aetna. As Judge Melissa Owens Lassiter said in her opinion:

[The] preponderance of the evidence showed that the Plan conducted the procurement carefully and thoughtfully, fairly and in good faith, and that its decisions were properly within its discretion.  It also showed that the vendors’ proposals were evaluated and scored carefully, accurately, and fairly by the Plan and Segal as the Plan’s contractor, and that to the extent the Plan relied on Segal’s analyses and recommendations, that reliance was in good faith and properly within the Plan’s discretion. Separately, Blue Cross failed to demonstrate that any alleged errors by the Plan or Segal substantially prejudiced its rights.

The award was the result of 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 include processing claims and offering a comprehensive network of health care providers. It also reflects a partnership that focuses on transparency and lower costs.  

Unfortunately, Blue Cross NC was a sore loser in thinking that it was entitled to nearly a half century monopoly on the State Health Plan’s business. They decided to try a “sue till you’re blue” strategy, costing the state over $1 million in legal fees, for which taxpayers would welcome a reimbursement from Blue Cross NC. Thankfully, Judge Lassiter saw through their legal gymnastics.

We are thankful for the work of the staff at the Office of Administrative Hearings and Judge Lassiter’s thoughtful decision, and look forward to continuing to serve our 740,000 members with Aetna as a partner. It’s a long runway, but both Aetna and the State Health Plan are hard at work to ensure that the Plan’s members receive the care they need when the new contract begins on Jan. 1, 2025. We’re also working hard to ensure that open enrollment, beginning in October, goes well and the transition will be seamless for our members.

Please see the decision here.