Newly released emails show that problems with North Carolina’s Blue Cross Blue Shield claims system last year prompted the state’s health plan to offer the high-priced contract – a decision which could end the health insurer’s long tenure in labor management.
Last month, the health plan’s board voted to give the three-year contract to for-profit companies Etnaalthough Blue Cross NC is a not-for-profit and the third bidder, a for-profit organization United Healthcare subsidiary, are appealing the decision.
Aetna’s proposal would reduce administrative costs by $140 million while providing more transparency on vendor fees, the state treasurer Dale Folwell said.
Emails obtained by The News & Observer from the Treasurer’s Office show trouble quickly surfaced early last year after Blue Cross NC moved the nearly 740,000 State Health Plan members into its FACETS claims-handling system.
Insurer switched to FACETS in 2016, then encountered processing issues that prompted nearly 3,500 complaints from providers and customers outside the state health plan, and a record $3.6 million state fine Insurance Department This year.
Treasurer’s staff watched the issues unfold and told Blue Cross NC they wanted the state health plan to be the last customer to use the FACETS system, according to the emails. The staff hoped that the issues would have been resolved by then.
Email correspondence from last year indicates that they have not been corrected.
Frustrated exchanges
In a March 11 message sent to CEO of Blue Cross NC Tunde Sotunde and vice president Roy WatsonExecutive Director of the State Health Plan Dee Jones said the health scheme administrator had only been able to resolve about half of more than 100 treatment issues, ‘a significant number of issues for a program that was rolled out years ago’ .
Other correspondence shows that the system had wrongfully dropped some medical providers and said blue cross the registrants their suppliers had been abandoned when they were not.
“I know there are many people trying to resolve these issues, but I have lost faith that there will be a full resolution soon,” Jones wrote to Sotunde and Watson on March 29. “I have also lost faith in Blue Cross NC’s ability to provide the right resources to effectively administer the Plan’s business needs.
Three weeks later, as more issues surfaced, Jones told them that “the plan has lost faith in Blue Cross NC and will issue a TPA tender later this year to proactively ensure that the needs of the plan are satisfied”.
“RFP” refers to a Request for Proposals, a tendering process used by governments to select a contractor. TPA refers to a third-party administrator – in this case, a contractor who negotiates prices with hospitals and other healthcare providers and who processes invoices.
This move meant blue cross would not have the option of extending his administration until 2026, treasurer officials said. Current contract ends January 1, 2025.
Blue Cross NC has been the plan’s third-party administrator for over 40 years. His state health plan contract from 2022 to 2024 was worth $9.4 billionaccording to the statement released when Folwell announced the contract in 2020.
Email shows Folwell’s frustration with Blue Cross NC. In a February 13 email to Sotunde and Watson, he threatened to go public. “Please stop taking this account for granted, get your hands dirty and solve your problems!” ” he wrote.
Sotunde responded with an apology. “I assure you that our teams are working urgently to resolve the outstanding issues,” he wrote.
Business North Carolina reported that these questions were aired at meetings of the State Health Plan’s board of trustees, with Watson apologizing for the issues at a meeting in June.
Penalties paid for performance
Blue Cross NC paid more than $900,000 in penalties for non-compliance with performance guarantees and credited the health plan with $1 million towards the administrative costs because of the problems with FACETS, treasurer spokesperson Frank Lester said last week.
The state health plan issued the request for proposals in August. The selection process required board members to focus on the three bidders’ proposals and technical evaluations by the treasurer’s staff. In a closed session last December, the council unanimously chose Etna take over the contract January 1, 2025.
Jones quit his job two days after the Etna decision to start a new position at IT company CGI, according to his LinkedIn page.
Sara Langa spokesperson for Blue Cross NC, said in an email last week that it was “not unusual” to have issues when “transitioning large datasets to new software.”
“Blue Cross NC has worked closely and transparently with State Health Plan leadership to address these operational challenges, while providing the support that teachers, state employees, and taxpayers expect and deserve,” said Lang said.
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In its appeal, Blue Cross NC attacked the RFP process, saying the plan’s scoring system for proposals gave the company little opportunity to explain why it was the best option.
“The scoring system assigned zero points to the strength, depth and breadth of each bidder’s supplier network,” wrote Matthew Sawchak, a Blue Cross NC attorney. “These networks play a central role in ensuring that North Carolina residents have access to high-quality health care.”
Sawchak also wrote in the call that the RFP did not take into account the challenges of moving to a new administrator, “such as the need to change vendors, the need to adapt to different review approaches requests and the need to request new prior authorizations for certain processing operations.
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