Under the Dome

SEANC, Justice Center call for audit

The State Employees Association of North Carolina and the N.C. Justice Center's Health Access Coalition today called for an independent audit of the State Health Plan's contract to administer claims.

Both groups also want the state to submit the contract to open bidding. Legislation passed in 2005 allowed the health plan to bypass the open bid laws to select a company to administer a new Preferred Provider Organization option, Dan Kane reports.

The plan then awarded the contract to Blue Cross and Blue Shield of North Carolina. Another law so far has been interpreted to keep many of the contract's details under wraps.

On Saturday, The News & Observer reported that Blue Cross received $97.5 million in the 2007-2008 fiscal year for administering the PPO plan and a second plan that is being phased out at the end of this year. Blue Cross processed 9.4 million claims, which means the company received more than $10 per claim.

Electronic Data Systems, the company handling claims for Medicaid, is receiving 57 cents per claim from the state.

More after the jump.


A state audit in 2007 also found that Blue Cross charged an average of $4.88 per claim to manage a health plan for low income children. At that time, EDS was averaging 41 cents per claim under the Medicaid contract, the audit said.

"The huge gap between what it costs to administer other state health programs and what Blue Cross charges for the State Health Plan for a similar service raises serious questions," said Adam Searing, director of the Health Access Coalition. "To properly serve both state plan members and taxpayers, an independent audit and public bidding process are necessary."

Blue Cross officials contend their contracts with the state require more work than EDS's. The nonprofit, which is also the state's largest health insurer, also said that its profit margin on the PPO contract is less than a penny on the dollar. Health plan officials say administrative costs, which include Blue Cross' contracts, are in line with 12 other states.

Searing and SEANC Executive Director Dana Cope say an independent audit might determine whether the state is overpaying on the contracts. State legislative leaders have introduced a bill that would cost taxpayers roughly $425 million to bail out the plan. The legislation also requires higher co-payments and deductibles that would be paid by the plan's roughly 667,000 state employees, teachers and retirees.

Cope said the plan's dealings with Blue Cross need more sunshine, given recent findings that the nonprofit is being paid $20 million more each year under the PPO contract than plan officials had anticipated.

"While state purchasing agents are required to bid office furniture, it's ridiculous that the $100 million annual health plan contract is not openly bid for the best services and price available."

The bail out legislation is scheduled to be heard at 1 p.m. Tuesday in a joint legislative committee that oversees the health plan.

Correction: An earlier version of this post misstated the amount of the bailout legislation.

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