RALEIGH — North Carolina State Treasurer Dale Folwell has announced that the State Health Plan will be moving from Blue Cross and Blue Shield of North Carolina to Aetna starting in 2025.
The State Health Plan is a division of the Department of State Treasurer and covers around 740,000 current and former state employees such as teachers, retirees, lawmakers, state university and community college personnel, as well as their dependents.
The three-year initial service period for the Third-Party Administrative (TPA) Services Contract to Aetna will start Jan. 1, 2025, and will run through Dec. 31, 2027. There is also an option to renew for two, one-year terms.
“We appreciate the years of service that Blue Cross NC has given our members. I’ve spoken with Blue Cross President and CEO Tunde Sotunde, M.D., and Board Chair Ned Curran, and they assure me that they will finish strong for the next two years,” Folwell said in a press release.
Blue Cross and Blue Shield of North Carolina had held the TPA contract for over 40 years per the treasurer’s press release.
Folwell’s office estimates $140 million in administrative savings with the move, citing a partnership with Aetna that includes lower costs and better transparency.
“Partnering with Aetna, which already employs over 10,000 people in North Carolina, will create a lot of new opportunities for the Plan and the members we serve,” Folwell said. “A change of this magnitude is a great opportunity for a fresh perspective, and we look forward to working closely with Aetna to create new ways to provide price transparency, increase access and quality while lowering the cost of health care for those who teach, protect and serve, and taxpayers like them.”
According to Folwell’s release, nearly 600 Aetna employees have been assigned to work on this transition with State Health Plan Director Sam Watts for the next two years.
Information on the switch will be sent to State Healthplan members in 2024 prior to open enrollment for the 2025 benefit year.
According to a presentation given to the State Health Plan’s Board of Trustees in December, as of Oct. 2022, the plan’s expenses for the fiscal year 2022 came in at $1.4 billion. The same presentation said the plan had a beginning cash balance of $590.7 million and an ending cash balance of $739 million.
The move to drop Blue Cross in favor of Aetna with transparency as a major reason is consistent with Folwell’s past Clear Pricing Project efforts announced by the treasurer in 2018. Since taking office, Folwell had repeatedly asked for and had been denied the rates Blue Cross pays for procedures in order to assess the value and compare costs with other plans.
In September 2017, Folwell made it clear transparency and affordability were paramount in the state’s continued relationship with Blue Cross, stating, “As we move toward implementation, we will reset our relationship not just renew our vows.”
Folwell went on to say that “As the largest direct purchaser of health care in North Carolina, we will work with Blue Cross Blue Shield of North Carolina and medical providers to reduce complexity and improve Plan affordability as well as increase access for our members and taxpayers.”
Healthcare groups and providers like the North Carolina Hospitals Association (NCHA)pushed back on the Clear Pricing Project. NCHA mounted a graffiti campaign on sidewalks outside the General Assembly in 2019 in support of House Bill 184; a bill that sought to end Folwell’s reforms to the state health plan.
Another bill came along In 2021 with a requirement for the State Health Plan administrator to make pricing data publicly accessible. Folwell backed that bill, which had high bipartisan support, passing the Senate unanimously after some changes but the measure did not make it out of the House but instead was referred to a committee.
The Clear Pricing Plan also saw a boost in January 2021 when a court ruling upheld a Trump administration’s executive order requiring hospitals treating Medicare patients to disclose the rates for services negotiated between hospitals and insurance companies.