A subsidiary of Blue Cross and Blue Shield of North Carolina has taken over administration of health insurance benefits for newly hired state employees at UNC Health.
This follows Blue Cross NC’s loss early last year of the contract to administer the state’s health plan, which covers nearly 740,000 teachers, state employees, retirees and their dependents, a role it held for more than 40 years.
But now the new state budget will allow the company, North Carolina’s largest insurer, to replace the State Health Plan for a group of state employees.
The budget passed by the GOP-controlled state legislature in October allowed UNC Health and ECU Health to create their own pension plans for new employees hired after Jan. 1, 2024.
Employees hired before that time will remain in the state’s plans. This budget language also allows those systems to create their own health insurance plans, according to North Carolina State Treasurer Dale Folwell.
As for the retirement plan, new employees of the two health systems will be enrolled in the UNC Optional Retirement Program, an alternative to the state pension plan that is much less used by retirees and existing employees and whose benefits depend on investment performance. New employees will no longer be able to join the state pension plan, which provides employees with a predetermined benefit when they retire.
Regarding health insurance benefits, UNC Health has moved new state employees out of the State Health Plan and into health insurance benefits from Brighton Health Plan Solutions, a subsidiary of Blue Cross NC.
ECU Health has not opted to change, and state employees there, including new ones, remain eligible for the state’s plan, according to Jamie Smith, a spokesman for East Carolina University.
The changes have faced opposition from the North Carolina Retired Governmental Employees’ Association, the State Employees Association of North Carolina and Folwell, who said the move would impact state employees and taxpayers.
The new roles of Brighton Health Plan Solutions and Blue Cross NC
There are few public details about the new agreement, which allows New York-based Brighton Health Plan Solutions to take control of administering health insurance benefits for new UNC employees.
Brighton is a subsidiary of Blue Cross NC, according to Sara Lang, spokeswoman for Blue Cross NC.
Brighton uses Blue Cross NC’s provider network, said Alan Wolf, UNC Health spokesman.
Blue Cross NC has an existing contract, secured through a competitive bidding process, to manage health insurance benefits for UNC Health’s private, non-government employees, Lang said. Brighton “acts as a third-party administrator and will assist Blue Cross NC in managing that contract, as they do in many cases,” she said.
This began last year when the contract providing health insurance benefits to UNC Health’s private, non-governmental employees at UNC Rex Hospital and other affiliated hospitals came up for renewal, Wolf said.
UnitedHealthcare had managed health insurance benefits for these private employees since 2015. But after complaints about United, Wolf said, the contract was put out to tender and Brighton was selected as the new third-party administrator last summer.
“We decided to move forward with Brighton Health and the North Carolina BCBS network because the services they offer best meet the needs of our teammates and provide the highest overall value for UNC Health,” Wolf said.
“One factor was lower costs to plan members, but also robust reporting systems and data analytics that help measure the success of various wellness programs,” he said.
Because that administrator and those benefits were already in place, “it was relatively easy to include new state employees hired after Jan. 1 in those health insurance benefits,” Wolf said. That didn’t require a new contract or competitive bidding process, he said in an email to The N&O.
Questions from the State Treasurer
Folwell, a Republican and gubernatorial candidate, said in an interview with The N&O on Monday: “Even for me, it’s difficult to figure out how many different special interests were involved in this transaction.”
He questioned how Brighton and Blue Cross NC could provide better and cheaper benefits to workers affected by the legislation than the state.
UNC Health is “violating its fiduciary duty,” he said, adding that the change also opens the possibility for other state entities to split off from the state’s pension and health insurance plans, which would impact those plans and increase costs to taxpayers.
When Blue Cross NC lost the State Health Plan contract to Aetna, Folwell said, “they were, from our perspective, poised to successfully close them out in the last year of their 43-year relationship,” but instead his office became embroiled in litigation with them, he said. Blue Cross NC contested the loss of the contract in court.
When asked about the budget amendment that allows UNC Health to create its own health insurance plans, Lang said via email that “Blue Cross NC was not involved in the legislation in question.”
Wolf said about 9,500 UNC Health employees are state employees covered by the state health plan, plus 6,500 dependents. UNC Health hired more than 2,000 new employees last year, he said.
When asked about the cost to UNC of the contract and its expansion under the budget, Wolf said UNC Health does not disclose financial details or specific terms of “this type of contract” because they are considered the property of the contractors.
Brighton did not respond to an email sent on Monday.
