News: Quick Takes

State treasurer awards BlueCross BlueShield of North Carolina administrator contract


State Treasurer Dale Folwell has awarded BlueCross BlueShield of North Carolina the Third Party Administrator contract for the State Health Plan.

The TPA negotiates contracts with health-care providers and processes claims paid with taxpayer money. BlueCross BlueShield of North Carolina holds the current TPA contract, which expires Dec. 31, 2018. The new contract will run until 2021 and then face a performance review.

UnitedHealthcare, MedCost, and Aetna also submitted proposals, but BlueCross won the bid. The board of trustees voted on the proposals and, said Folwell, the vote was unanimous.

“We are incredibly honored to continue serving the employees of the state and their families,” said Susan Murray, vice president of the state segment for the health-care provider.

“This announcement [Tuesday] is not a renewing of our vows, it is a resetting of our priorities and our relationship,” Folwell said. “We are going to be reducing complexity of the State Health Plan moving forward and building value for participants.”

The North Carolina State Health Plan is the largest buyer of employer-sponsored health care in the state, with coverage for more than 700,000 teachers, state employees, retirees, lawmakers, state university and community college personnel, and any dependents. The General Assembly funds the plan through appropriations.

In 2016 the plan spent $3.262 billion on medical claims, pharmacy claims, Medicare Advantage plans, and administrative costs. More is spent on the plan than on the entire UNC system, which amounts to $2.85 billion a year.

Folwell warned of an impending problem facing the state, which has about $48 billion in unfunded liabilities for retiree health benefits.

“This is a serious matter. It is a matter that is going to face the next treasurer of North Carolina,” Folwell said. “It’s not emotional, it’s not political, it’s mathematical.”

Folwell said the cost of prescriptions and medical expenditures are growing every year. The state treasurer said the plan is to work with BlueCross and medical providers to reduce complexity, increase plan affordability, and empower participants to understand the cost of what they’re consuming as a means to combt wasteful spending.

“We have to find a way to take $300 million a year out of our health-care spending,” Folwell explained. “Our need to cut $300 million out of the cost of this $3 billion-a-year operation is not something we just thought of. It is a necessity.”