New documents show better State Health Plan oversight
Newly released documents show State Health Plan leaders sought and won more oversight of its contract with Blue Cross.Posted — Updated
Blue Cross handles administrative and claims processing services for the State Health Plan, which provides health coverage for more than 667,000 state workers, teachers and retirees. In the 2009-10 fiscal year, the insurer processed nearly $1.8 billion in claims for the plan, and the state paid the insurer almost $108 million.
The contract limits Blue Cross’s profit margin to 0.625 percent of the cost of the claims. But critics have long accused the insurer of padding its profits by charging the state too much for administrative overhead.
For years, Blue Cross has refused to release some information about its dealings with the state on the grounds of business confidentiality. It first released its contract with the State Health Plan in 2009, but some information was blacked out.
“Really, what we were trying to do was exclude costs that would be excluded in federal contracts,” explained State Health Plan Chief Financial Officer Mona Moon. The original contract didn’t exclude anything.
Another amendment caps the growth of year-over-year cost. The original contract allowed Blue Cross to adjust its rate for inflation and add 4 percent every year.
“It essentially grew off itself every year,” said Moon. “That cap would grow regardless what was happening with the underlying cost.”
“We certainly recognized when we joined the plan in 2008 that there was a fair amount of risk in the agreement,” said the plan’s Deputy Executive Administrator Lacey Barnes. “These amendments have been our way of limiting the risk and increasing our ability to mange the plan and its costs effectively.”
But even before those changes took effect, the new documents show that Blue Cross was already starting to lower its base price.
In 2008, Blue Cross charged the state $15.15 per month per member for processing and support. In 2009, the figure dropped to $14.56. Last year, it fell to $14.
Blue Cross spokesman Lew Borman said Friday’s release confirms the company has followed through on its pledge to control state costs for overhead spending.
“Our administrative costs are less than 6 percent of the cost of the State Health Plan,” Borman said. “Our profits are literally less than a penny on the dollar.”
“What’s the big elephant in the room? Health care costs,” said Borman. “That’s what’s breaking the back of the State Health Plan.”
One of Blue Cross’s most outspoken critics, the State Employees Association of North Carolina, applauded the document release, noting that a bill on the governor’s desk would likely require it soon, anyway.
“All that’s great,” said SEANC spokeswoman Cary Edgar. “But it’s just a drop in the bucket in terms of reforming the State Health Plan.”
Edgar says the biggest problem is Blue Cross’s no-bid contract. “Taxpayers and state employees are never going to know if they’re getting a good deal until they have something to compare it to.”
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