Released documents show how Aetna won SHP contract
The North Carolina State Health Plan and State Treasurer Dale Folwell released documents from the Plan’s Request for Proposal process to change its third-party administrator from North Carolina Blue Cross Blue Shield to Aetna at a media event Tuesday.
It was announced last month that Aetna was awarded the TPA contract over BCBSNC, which had been the TPA for more than 40 years, and UMR, Inc. The Plan also announced last month that it rejected appeals from both.
Folwell had said Tuesday morning at his monthly “Ask Me Anything” Q&A with reporters that they had received a lot of public records requests about the process from Blue Cross and UMR.
“After this contract was awarded, we were in the quiet period, and we chose to honor that because that’s what quiet means,” he said. “We were actually waiting on some of the people who are protesting this to redact some of their materials, so you know we’re being criticized for not providing stuff when we’re actually waiting on them to redact the information so that we can give it to you and I will tell you, that I don’t think there’s been any other state agency who has responded this completely or this quickly to these inquiries as we’re about to today.”
The materials are also available for public inspection on a webpage created specifically for the documents.
Plan interim director, Sam Watts, said they received inquiries from four bidders, but one didn’t follow through with a minimum requirement proposal. He explained that Aetna, BCBSNC, and UMR were deemed to have the ability to do the work and to have the resources available in North Carolina to do the work. The technical and cost components of the procurement were weighted 50-50. Scoring was designed to be more objective with yes or no questions, and their consulting actuary reviewed the cost proposals and scored at the initial level and then at the best and final offer stage.
One way the scores were compiled was how a vendor would apply the utilization management and payment rules in North Carolina and in other states the same way, for instance, if someone in Charlotte would see a provider in nearby South Carolina. Other factors that the Plan looked at were they wanted to have a system where they had a unique member identification number for the state health plan that was consistent across all vendors. They wanted their members to have the most up-to-date approach to getting information to their providers on things like medical health records.
“Right now those are in different systems,” Watts said. “The healthcare provider has to look in different places to get information that should be easily accessible.”
Watts said another factor that was high on their list was they want the vendor to pay claims, including non-network claims, based on the assignment of benefits. Right now, BCBSNC sends a check to a member if the member visits an out-of-network provider.
The bids came in with BCBS at $17.505 billion, Aetna at $17.522 billion, and UMR at $17.792 billion.
He said that BCBSNC actually had a lower cost in some areas, but it wasn’t worth as many points in important areas like claims.
“On the cost of claims, Aetna scored the most points,” Watts said. “Blue Cross had the lowest cost on the administrative side, but Aetna had the lowest cost on the claims side, but the claim side was worth more points because it’s billions instead of tens of millions, so total cost ends up being if the cost guarantees are factored in.”
Watts said there is a major difference in terms of the current contract with BCBSNC versus the one with Aetna that is scheduled to take place on Jan. 1, 2025. He said they got rid of a lot of what they considered “fluff” in the BCBSNC contract by asking yes or no questions because they wanted to know whether the vendor could do what they needed them to do.
“The (BCBSNC) version required our staff to spend days if not weeks reading paragraph after paragraph of explanations as to why something or why someone should get partial credit for what we’ve now converted to a yes or no question,” Watts said. “This is a bit of an oversimplification, but when I go to a used car lot and I’m looking at two different cars, I’m going to ask, does the heater work on this one and if it doesn’t, it’s a yes-no question and you can kind of nuance say well, it’ll work three years from now when we get a part ordered or, but does the heater work or not?”
Watts said some files do show that BCBSNC and UMR might have larger networks, but what will matter is how the health plan will look on Jan. 1, 2025.
“The new vendor has 18 to 24 months to sign up new providers, get things correctly set up for open enrollment, but we’ll still be able to add healthcare providers after that,” Watts said. “We also have the option of continuing our own clear pricing project network, which currently has more than 28,000 providers who are willing to accept a transparent reference-based price. We’ve got greater capabilities to engage in innovative and transparent contracting arrangements and give more access to more providers at a lower cost.”
He said the three proposals were very close, so close, in fact, they took them to the board of trustees to review, ultimately voting unanimously to engage in the new contract. After the board meeting, they let the vendors know the final decision and met with them in person soon thereafter. But they are at a point where they want to turn from focusing on the procurement process to providing service to their members without distractions.
Aetna currently has more than 600 employees assigned to work on the transition for the next two years.
“We’re ready to move on and to do the right thing for our members and we’re focused on getting that right and we’ve got the right people here, the right team to make that happen,” Watts said.
Both said they evaluated and scored each bid exactly as they defined, so no one should be surprised that they scored it exactly like they put in the RFP and told everybody how they would do it.
“The documents released reveal that North Carolina’s teachers, state employees and taxpayers will pay more and get less under the new State Health Plan contract,” Sara Lang, a spokesperson for BCBSNC said in an emailed statement. “Blue Cross NC offered the lowest total cost by more than $17 million as well as the broadest network, making its proposal the best for the state. These documents say nothing on network analysis or disruption to member care, which are of critical importance to Plan members who want to keep their doctors.”
Lange said BCBSNC would continue to pursue efforts to investigate the decision and to ensure the best outcome for teachers, state employees, and North Carolina taxpayers.
Folwell said that increasing quality and access and lowering costs for healthcare is something they think they have with Aetna.
“I’ll just remind you what is in the Bible, and that is when you win, you should be humble,” he said. “I think Aetna has been humble in its winning, and no one likes a sore loser.”