![\"North](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/04\/RAL_COUNCILOFSTATE-NE-020425-RTW_9.JPG\" "\\"North")
<\/p>\n <\/p>\n
North Carolina Treasurer Brad Briner speaks during a Council of State meeting on Feb. 4, 2025.<\/p>\n
Robert Willett<\/p>\n
rwillett@newsobserver.com<\/p>\n
<\/p>\n AI-generated summary reviewed by our newsroom.<\/p>\n <\/a><\/p>\n Read our AI Policy.<\/a><\/p>\n The State Health Plan canceled its initial insurer search after no bids met requirements.A new RFP will be issued in the coming weeks and the plan remains in a silent period.The services under the TPA contract would start January 1, 2028 with optional renewals.RALEIGH<\/p>\n The North Carolina State Health Plan has scrapped its initial search for a new health insurer to serve as its administrator after no bidders met minimum requirements, resetting the search process for a program covering over 500,000 state employees, retirees and dependents.<\/p>\n The plan issued the request for proposals \u2014 an invitation for vendors to submit bids \u2014 on March 20, 2026, and will issue a new RFP in the coming weeks, according to a news release from the state treasurer\u2019s office.<\/p>\n The March RFP came in year two of a three-year contract with Aetna and less than a year and a half after the state switched to Aetna from Blue Cross Blue Shield of North Carolina, which had served as the plan\u2019s third-party administrator for 40 years. That\u2019s despite the contract with Aetna having an optional two-year extension.<\/p>\n That decision under former Treasurer Dale Folwell led to prolonged legal challenges, after Blue Cross filed protests and lawsuits alleging the bidding process was flawed and unfair. An administrative law judge ultimately upheld the state\u2019s decision to select Aetna. That cost the state over $2 million in legal expenses, Beth Horner, director of communications with the SHP, said in an email response to questions from The N&O.<\/p>\n The plan will remain in a \u201csilent period\u201d while staff work to develop the revised solicitation, according to a news release from Treasurer Brad Briner\u2019s office, which houses the State Health Plan.<\/p>\n The aim is still for the plan\u2019s Board of Trustees to approve the contract award later this summer, the news release said.<\/p>\n The initial RFP released in March would have given the State Health Plan more flexibility in designing benefits and more control in negotiations with providers, instead of insurers.<\/p>\n Asked about any pushback on this new strategy during an interview earlier this week with The News & Observer, Tom Friedman, the plan\u2019s executive administrator, said they were \u201cabsolutely not\u201d getting pressure from doctors and health systems.<\/p>\n \u201cNorth Carolina providers really want to serve teachers and state employees. I think they hit some abrasion points with insurance companies that if their relationship is more directly with the State Health Plan, one, it feels a little bit less combative, and two, they are willing to provide deeper discounts and do things a little bit differently,\u201c he said.<\/p>\n \u201cI don\u2019t think it\u2019s probably insurance companies\u2019 favorite approach to be kind of pushed back from some things. But we\u2019re not a 50- or 500-person group; the contract is over 550,000 people,\u201d he said.<\/p>\n \u201cI think we know our members\u201d and \u201cwe want to make sure their unique values and what we\u2019ve learned from them over time are really articulated throughout the contract,\u201d he said.<\/p>\n \u201cSo I\u2019m very happy if they don\u2019t bid, if they don\u2019t want to adhere to that,\u201d he said.<\/p>\n The RFP concerns third-party administrator services that would begin Jan. 1, 2028.<\/p>\n The original RFP outlined two additional optional, one-year term renewals.<\/p>\n Submission of proposals on minimum requirements were due from bidders by April 8. Full proposals, which include more detailed information on contract costs, provider networks and more, were to be due May 18.<\/p>\n State Health Plan changes<\/p>\n The State Health Plan has undergone significant changes under the leadership of Briner, who took office in 2025, and Friedman. These include premium increases<\/a> via a tiered system based on salary and higher deductibles.<\/p>\n Last year, the plan also launched a surgical benefit with Lantern, a specialty care platform, offering certain surgeries at no cost to members. The plan pays less when these providers are used. Novant Health and EmergeOrtho joined that partnership. Earlier this year, the plan\u2019s board of trustees approved contracts with three clinically integrated networks, or groups of health care providers: Aledade, Community Care Physician Network and UNC Health Alliance.<\/p>\n In March, the plan\u2019s board of trustees approved the implementation of a three-tier network structure<\/a> in which members and the plan would pay less when preferred providers are used and more when non-preferred providers are used. The vote was not on specific cost-sharing amounts, but rather to approve the structure. No final decision on costs will come until June.<\/p>\n The third-party administrator contract launched in March would have given the SHP further latitude to try new strategies.<\/p>\n Friedman said Monday that the plan wanted to \u201cgive ourselves the flexibility to correct as the market conditions change, or success kind of wanes and goes.\u201d<\/p>\n Friedman said that the plan is negotiating contract rates with other doctors and health systems to amplify that preferred provider network.<\/p>\n Those rates \u201care specific rates between the entity and the State Health Plan,\u201d meaning that whoever is the next administrator would load those into their system, giving the SHP \u201cbetter transparency and kind of control over the rates.\u201d<\/p>\n That would also mean providers would not have to renegotiate rates every time there is a shift of administrators.<\/p>\n A third-party administrator handles all of the administrative tasks associated with health insurance, which include issuing cards, processing claims, setting up technological systems and more. For this, the state pays a fixed per-member cost.<\/p>\n In the case of North Carolina\u2019s State Health Plan, the administrator also lays out contracts with a network of providers and negotiates the prices paid to them for health care services. It does not pay claims as a typical insurer would. The administrator sends claims to the state, which is on the hook for covering health care costs.<\/p>\n The new rates laid out by the SHP via its contracts would supersede contracts laid out by the administrator. Any rates the SHP has not already set on their end would then go by default to the rates the insurer has established, said Friedman.<\/p>\n Friedman said by June, the plan should have a sense of who will be a preferred provider. That will be across practice types, and the plan is focused on negotiating with health systems and doctors in different regions of North Carolina to pick the preferred ones.<\/p>\n Penny wise, dollar foolish?<\/p>\n Full bid proposals require bidders to lay out their contract value.<\/p>\n For the 2025 contract with the State Health Plan, Aetna priced its total contract value at approximately $9.9 billion for three years. That included $293.6 million in administrative costs and the rest in claims costs.<\/p>\n That RFP occurred under the prior treasurer, Folwell, who like Briner is a Republican.<\/p>\n But Aetna\u2019s estimates for the three-year period were off as claims and administrative costs came out higher, according to an SHP projection shared with The N&O.<\/p>\n The N&O has contacted Aetna for comment but has not yet heard back.<\/p>\n Friedman said they estimated costs would continue increasing by about 6% to 7% annually.<\/p>\n As for what they were looking for in terms of costs under the new contract, Friedman said Monday that \u201cthe previous administration initially wanted the lowest possible administrative fee and then, the next year had to buy a few more services to make sure the plan could run smoothly.\u201d<\/p>\n He said, \u201cI am not trying to pay materially more for administrative fees unless I am getting materially more,\u201d adding that the plan wants to focus on population health and patient navigation.<\/p>\n \u201cI don\u2019t want to be penny wise, to be dollar foolish,\u201d he said.<\/p>\n He also said he wants more flexibility to pay doctors directly instead of paying insurers: \u201cHow can we carve out services where we want to where we think we would rather pay doctors in North Carolina to deliver care than pay an insurance company to deliver some services?\u201d<\/p>\n He added, \u201cI want the flexibility to be able to kind of attack problems. And I think that\u2019s a very different way to think about administrative fees.\u201d<\/p>\n On potential issues should the State Health Plan shift to a third-party administrator that is not Aetna, Friedman said, \u201ctransitions are, by nature, a little bit rocky, and we\u2019re going to try to learn the lessons we learned last time, continue to get feedback from members and try to address the issues.\u201d<\/p>\n He said that out of millions of claims, there were less than 1% with issues, but \u201cthat\u2019s still unacceptable, and it\u2019s still our job to solve them.\u201d<\/p>\n This story was originally published April 15, 2026 at 1:37 PM.<\/p>\n Related Stories from Raleigh News & Observer<\/p>\n