New state workers at UNC Health now get coverage through Blue Cross subsidiary, not NC

A subsidiary of Blue Cross and Blue Shield of North Carolina has taken over the administration of health care benefits to newly hired state employees working at UNC Health.

This follows the loss by Blue Cross NC early last year of the contract to administer the State Health Plan, which covers nearly 740,000 teachers, state employees, retirees and their dependents. It had held that role 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 one group of state workers.

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 remain on the state’s plans. That budget language also allows these systems to create their own health plans, according to North Carolina State Treasurer Dale Folwell.

In terms of the pension plan, new employees of the two health systems are being placed in the UNC Optional Retirement Program, an alternative to the state pension plan used much less by retirees and existing employees and that pays out benefits depending on investment performance. New employees are no longer able to join the state’s pension plan, under which employees are provided a pre-established benefit upon retirement.

As for health benefits, UNC Health moved new state employees away from the State Health Plan and into health benefits administered by Brighton Health Plan Solutions, a Blue Cross NC subsidiary.

ECU Health did not opt for a change and state employees there, including new ones, will remain eligible for the state’s plan, according to Jamie Smith, a spokesperson for East Carolina University.

These changes have met opposition from the North Carolina Retired Governmental Employees’ Association, the State Employees Association of North Carolina, and from Folwell, who have said the move will affect state employees and taxpayers.

Brighton Health Plan Solutions and Blue Cross NC’s new roles

Public details are scant on the new arrangement allowing Brighton Health Plan Solutions, which is based in New York, to take control of the administration of health benefits for new UNC employees.

According to Blue Cross NC spokesperson Sara Lang, Brighton is a subsidiary of Blue Cross NC.

Brighton uses the Blue Cross NC network of providers, sald Alan Wolf, spokesperson for UNC Health.

Blue Cross NC has an existing contract, secured through a bidding process, to administer health benefits for UNC Health’s private, nonstate employees, said Lang. Brighton “serves as a third-party administrator and will be assisting Blue Cross NC in administering this contract, as they do in many instances,” she said.

That began last year, when the contract for health benefits for UNC Health’s private, nonstate employees at UNC Rex Hospital and other affiliated hospitals was up for renewal, Wolf said.

UnitedHealthcare, since 2015, had been the administrator of health benefits for these private employees. But following complaints about United, Wolf said, the contract was put out for bids and Brighton was chosen as the new third-party administrator last summer.

“We made the decision to move forward with Brighton Health and the BCBS of North Carolina network because the services they offer best meet the needs of our teammates and provide the highest overall value to UNC Health,” said Wolf.

“Lower cost for plan members was one factor, as well as robust reporting systems and data analytics to help measure the success of various wellness programs,” he said.

As that administrator and those benefits were already set up, “it was relatively simple to begin adding new state employees hired after Jan. 1 to those health benefits,” said Wolf. This did not require a new contract or bidding process, he said in an email to The N&O.

Questions from state treasurer

Folwell, who is a Republican and is running for governor, on Monday in an interview with The N&O said, “it is difficult for even me to figure out how many different special interests have been involved in this transaction.”

He questioned how Brighton and Blue Cross NC would be able to provide better and cheaper benefits to the employees affected by the legislation than those offered by the state.

UNC Health is “violating their fiduciary duties,” he said, adding that the change also opens the door for other state agencies to separate from the state pension and health plans, affecting these plans and raising taxpayers’ costs.

When Blue Cross NC lost the State Health Plan contract to Aetna, Folwell said, there “was a willingness, from our point (of view) to have them finish strong in the last year of their 43-year relationship,” but instead, he said his office has been tied up in litigation with them. Blue Cross NC challenged the loss of the contract in court.

Asked about the budget change allowing UNC Health to create its own health plans, Lang said via email that “Blue Cross NC had no role in the legislation referenced.”

According to Wolf, about 9,500 UNC Health employees are state employees and covered by the State Health Plan, plus another 6,500 dependents. Last year, UNC Health added more than 2,000 employees, he said.

Asked about the cost to UNC for the contract and its expansion under the budget, Wolf said that UNC Health does not disclose financial details or specific terms of “that sort of contract,” as they are considered proprietary for the contractors.

Brighton did not respond to an email sent on Monday.