State Health Plan Standoff Ends Without Major Changes

Aug 8, 2019

Duke Health Raleigh, and other North Carolina hospitals, will remain in-network with the State Health Plan
Credit Duke Medicine

N.C. Treasurer Dale Folwell relented in his fight with the state's major hospitals to lower costs and increase transparency.

Instead of entering a new era of health care billing, the State Health Plan will go into 2020 almost exactly the way it leaves 2019. In the end, the risk of seeing more than 720,000 state employees and dependents face out-of-network costs at the state's largest hospitals was too great. The Treasurer's office offered anecdotes of teachers expecting to deliver babies in January and how the uncertainty of how those procedures would be covered weighed heavily on them.

Across the state, only five regional hospitals signed on the Folwell's proposed "Clear Pricing Project." That gave the hospitals strength in numbers, and holding firm in opposition to the plan increased pressure on the Treasurer to relent.

The Clear Pricing Project - conceived more than 18 months ago - would have removed all billing negotiations from the equation. Instead, the State Health Plan would have operated on a take-it-or-leave-it amount tied to Medicare. On average, providers would have received double what Medicare pays.

While happy to give health plan members certainty about their health insurance coverage, Folwell chastised hospitals for preferring to operate billing practices under a cloud of secrecy.

"By spending millions of dollars to oppose us and by using cartel-like tactics, these organizations were able to convince most hospitals to boycott the State Health Plan," Folwell said in a released statement. "If big hospitals could do this to their largest customer, just think what they can do to the individual average citizen or business. We're in a medical arms race in North Carolina. Every dollar unnecessarily or inefficiently spent on health care is a dollar that can never be spent on education and other core functions of government."

For their part, the N.C. Healthcare Association said it was relieved to put the fight behind them.

"We are pleased to see this positive step forward for the benefit of North Carolina teachers, government employees and retirees," the NCHA said in a statement. "While the specific benefit design for this plan has yet to be seen, this move will help maintain access to in-network care for state employees and retirees. NCHA and our members look forward to working with the Treasurer and the General Assembly to develop a stronger, sustainable, transparent future for the State Health Plan."

While hospitals will continue to receive payments on a fee-for-service basis, they can opt in to a new value based program offered by the State Health Plan. Those will include some combination of bundled payments and other outcomes-based reimbursement models. The 28,000 providers who signed on to the Clear Pricing Project will become the first enrolled in this new billing structure.

"The Clear Pricing Project is just the beginning. I appreciate that 28,000 providers – independent primary care providers, behavioral health providers, independent provider networks and the 5 courageous hospitals – have chosen to provide care to those who serve in state government," said Folwell. "These medical providers should be applauded."