Vendor complains of a “simplistic” bidding process that failed to delve deep enough, said its proposal got 303 out of a possible 310 points, but that the state asked “superficial yes-or-no answers” on those 310 questions, treated each question as equally important and refused to accept any explanations from bidders.
Blue Cross files protest over multibillion-dollar state health plan contract
NC plans to swap Blue Cross and Blue Shield of North Carolina for Aetna in 2025. Blue Cross is appealing that decision — a process that could take months, or even years, to finalize.
By Travis Fai, WRAL state government reporter
Blue Cross and Blue Shield of North Carolina on Thursday appealed a state decision to give a multibillion-dollar contract administering the North Carolina State Health Plan to one of its competitors, alleging that “limited information and arbitrary scoring” were used to make the decision.
The insurance giant had promised to file the appeal as soon as the state treasurer announced last week plans to replace Blue Cross with Aetna in 2025. Whoever administers the contract negotiates prices and manages claims for more than 700,000 state employees, teachers, retirees and their dependents.
State Treasurer Dale Folwell, whose office oversees the health insurance plan along with a board of trustees, said in a statement that he welcomes “a factual, thoughtful and transparent review of the State Health Plan’s contracting process.”
“Just like Blue Cross [and] 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 protest starts in the treasurer’s office, but if Blue Cross doesn’t get the outcome it wants there, it can sue in superior court. On Friday, after this article was first published, Folwell’s office said a group affiliated with United Healthcare, also a bidder, had also protested the awarding of the contract.
Blue Cross’ protest complains of a “simplistic” bidding process that failed to delve deep enough into which company would best serve state employees. The company said its technical proposal got 303 out of a possible 310 points, but that the state asked “superficial yes-or-no answers” on those 310 questions, treated each question as equally important and refused to accept any explanations from bidders.
“If the plan had allowed Blue Cross NC to explain why it did not confirm those requirements, the plan would have seen that those explanations enhanced the strength and credibility of Blue Cross NC’s proposal,” the company said in its protest letter. “The plan instead penalized Blue Cross NC for the careful nature of its responses.”
Blue Cross also said its network of “provider locations statewide appears to be 38% larger” than Aetna’s, but that they were treated as equivalent in the bidding process because both met minimum requirements. That speaks to a concern some state employees have as the contract changes hands: That their current doctor might not remain in-network, meaning they have to make a change or pay more.
In an opinion piece published Wednesday in The News & Observer, Aetna North Carolina President Jim Bostian said his team analyzed millions of claims Blue Cross processed for the plan over a year and that 98% of them came from providers already in Aetna’s network. Bostian also said Aetna is “communicating with additional N.C. providers to expand Aetna’s network even further.”
Blue Cross also said Thursday that it offered “the lowest administrative fee of any bidder.”
Folwell’s office has previously said that it expects to save $140 million over the life of the contract with Aetna.
In a news release announcing the protest, Blue Cross and Blue Shield of North Carolina Chief Executive Tunde Sotunde said the company will continue to provide plan members with “the highest level of service” while the appeal runs its course.
“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,” Sotunde said.