By David Mildenberg for BusinessNC
After more than 40 years, the N.C. State Health Plan will have a new administrator on New Year’s Day. Aetna is taking over the state’s largest health plan from Blue Cross Blue Shield of North Carolina.
The changeover follows two years of what Aetna MidSouth and Capital President Jim Bostian calls “a heavier lift than with just about any other customer in the history of our company.”
The self-insured health plan awarded the third-party administration contract to Aetna for 2025-27, overcoming a lengthy legal challenge from Durham-based Blue Cross, the state’s largest health insurer. The plan has about 750,000 subscribers, though some are Medicare Advantage customers who don’t take part in the plan that Aetna administers.
The plan handles more than $3.5 billion in annual claims, which explains why more than 1,000 Aetna employees worked on the conversion over the past two years. About 450 people will be primarily focused on the plan, mostly based at Aetna offices in Cary and High Point.
Blue Cross officials weren’t available Tuesday to describe how their staffing is affected by the decision.
The state plan has spent about $144 million annually on administrative expenses over the past four fiscal years, Business North Carolina reported previously. It has reported a cumulative profit of about $100 million during that period.
“We think we have an adequate gross margin and we can dedicate the resources that the state deserves,” Bostian says. “Our goal is to improve service and also become more efficient in managing our business.”
The changeover comes as State Treasurer Dale Folwell leaves office after two terms. He has been critical of Blue Cross’ operations and has promoted increased quality and lower costs expected from the Aetna relationship.
“We’ve thoroughly enjoyed working with [Folwell] and his team and we are incredibly thankful for the coordination and support we’ve gotten from this staff,” Bostian says. “We’re excited to meet with [incoming State Treasurer] Brad Briner and his team.”
Blue Cross contended it had a broader network of healthcare providers than Aetna. But Aetna officials say they aren’t aware of any members who have a provider not included in their network. “Frankly, there hasn’t been any disruption,” Bostian says.
The State Health Plan faces a $4.2 billion funding gap over the next five years as aging state employees and retirees are expected to make increasing claims while the number of young, healthy entrants to the plan has stagnated. Folwell has pressed state lawmakers to boost funding for the plan, with little success.
“What’s important to us is administering benefits and helping the plan evolve with strategies to make an adequate network and have adequate cost controls so that it can provide the benefits that employees deserve,” says Mike Driscoll, an Aetna vice president who has helped oversee the transition. “A big part of our work is to help the state implement new strategies that they want to utilize to address costs and lead to better health outcomes.”
Blue Cross is a not-for-profit institution led by a board made up of business and civic leaders. Aetna is a subsidiary of Woonsocket, Rhode Island-based CVS Health, the second-largest U.S. healthcare company with annual revenue of more than $350 billion, including its retail pharmacies.
The preceding article originally appeared on December 31, 2024 at the BusinessNC website and is made available here for educational purposes only. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 106A-117 of the U.S. Copyright Law.
