CHAPEL HILL, N.C. – The consulting firm Navigant has released an extensive report detailing its audit of BCBSNC’s administration of the State Health Plan. BCBSNC administers health benefits for over 660,000 State employees, teachers, retirees and their dependents. The Navigant audit was mandated by the N.C. General Assembly during the 2009 session.

The purpose of the audit was to examine a portion of the 5 percent of the State Health Plan’s budget that goes to pay administrative costs to BCBSNC and Medco Health Solutions, Inc., the State Health Plan’s pharmacy vendor. The audit covered the period from July 2005 through June 2008.

“Like others before it, the Navigant audit, confirmed that we are living up to our contract with the State Health Plan and providing quality service at a fair price,” said Ian Gordon, senior vice president and chief operations officer at BCBSNC. “Blue Cross earns less than a penny of profit on each dollar we receive to administer the State Health Plan. The price the State pays us to administer the plan has declined during the contract term.” 
Navigant’s audit was the third in 12 months to examine BCSBNC’s fulfillment of its contract with the State Health Plan. While the Legislature controls benefits and premium levels for the State Health Plan, BCSBNC provides administrative services including claims processing, customer service, processing appeals, enrolling and billing customers, managing networks of doctors and hospitals, and information technology services. Navigant’s audit examined all of these areas.

Key findings of the Navigant audit include:
  • The current “cost-plus” contract saved the State Health Plan money over the course of the audit period, compared to what the State would have paid under a fixed-cost arrangement.
  • BCBSNC’s costs to provide customer service, claims administration, information technology services and accounting services to the State Health Plan are consistently better than at least 75 percent of benchmarked plans.
  • If BCBSNC implemented all Navigant’s recommendations, BCBSNC’s total administrative costs could potentially be reduced by approximately 1 percent each year over the next four years (not including costs of implementation.)  
  • Overall, BCBSNC was compliant with its contract terms, state law and all relevant regulations in its administration of the State Health Plan.
  • BCBSNC’s cost-allocation methodology is consistent with the contract between the State Health Plan and BCBSNC, BCBSNC’s other lines of business and industry standards. This finding confirmed identical findings in previous audits by the North Carolina State Auditor and Thomas & Gibbs. 
About Blue Cross and Blue Shield of North Carolina:
Blue Cross and Blue Shield of North Carolina is a leader in delivering innovative health care products, services and information to more than 3.7 million members, including approximately 900,000 served on behalf of other Blue Plans. For 76 years, the company has served its customers by offering health insurance at a competitive price and has served the people of North Carolina through support of community organizations, programs and events that promote good health. Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. Access BCBSNC online at