Atrium pushes back after State Health Plan leaves healthcare network out of Tier 1

The State Health Plan's Board of Trustees decision to establish a tiered preferred provider network for its more than 750,000 members drew pushback on Friday from Atrium Health, which is not included in the top tier.

State Health Plan officials said Wednesday, July 15, that "all health systems were given the opportunity to work with the State Health Plan as a preferred provider."

On Friday, State Health Plan officials responded with a World Cup soccer analogy, saying, "Atrium Health's reaction is reminiscent of a World Cup team that loses and immediately blames the referee."

State officials added, "Fans expect that from the heat of competition, but the game is still decided by the rules on the field."

Meanwhile, a statewide advocacy group claims that Atrium's current absence as a Tier 1 State Health Plan provider could derail its plan to acquire WakeMed.

On July 10, the State Health Plan board approved Tier 1 preferred-provider contracts for Novant Health Inc. and UNC Health, effective Jan. 1.

Novant and UNC Health have agreed to provide discounted rates and collaborate with the state "to improve the health of our members and lower the total cost of care" for members.

Those systems were chosen, according to the board, because they "provide broad statewide reach through extensive networks of hospitals, physician practices, specialty providers and outpatient facilities."

At this point, Atrium Health is not listed in any of the State Health Plan's preferred provider tiers.

On Wednesday, the State Health Plan said Duke Health has been selected as a Tier 2 access provider starting Jan. 1.

A Tier 2 provider "maintains the same level of service next year, at the same cost as members are currently paying."

The state treasurer's office said Duke Health "came to the plan and made its intentions clear, it would create cost savings for both the plan and our members to be considered as an access provider, and then followed through with that contract agreement."

"Atrium Health never made an offer similar to this."

Atrium's response

Atrium said in Friday's statement that it has shared its concerns with State Treasurer Brad Briner and requested a meeting with State Health Plan leadership."

Briner, in his role as treasurer, oversees the State Health Plan.

Atrium said that by being excluded from Tier 1 preferred provider status, the state Health Plan "could leave more than 130,000 North Carolina state employees facing substantially higher costs if they wish to continue receiving care from the physicians, hospitals and care teams they know and trust at Atrium Health."

Tom Friedman, the State Health Plan's executive administrator, told the board in June that Atrium charges between 15% and 40% more than WakeMed for the same services. He warned the WakeMed-Atrium deal could raise state employee healthcare premiums by $7 to $11 per month.

"These dedicated public servants and their families deserve the confidence to know that decisions affecting their healthcare are being made through a transparent process and with patients' interests at the center. Atrium Health remains committed to being part of the solution," Atrium said. "It is also important to clarify that it did not decline participation in the tiered provider network arrangement and was never engaged to compete for the full scope of services included in the program. Any program that places substantial financial pressure on patients to change providers should be accompanied by a transparent assessment of the methodology, assumptions, quality measures, access implications and anticipated patient impact."

Atrium concluded, "We believe a more transparent and collaborative process is warranted and remain willing to engage in good-faith discussions that support the long-term sustainability of the plan while preserving affordability, access and meaningful patient choice."

State Health Plan response

Friday's statement from the State Health Plan and the treasurer's office said the plan "conducted a year-long process with clear intentions and expectations, followed by independent evaluation."

"Not every bidder can win, but you automatically put yourself in the (L) column if you don't ever enter a bid. In competition, whether on the soccer pitch or in public contracting, the integrity of the process matters more than the preferences of any single competitor."

The board statement confirmed that Atrium emailed Briner at 10:30 p.m. Thursday. The state said Briner had conversations with Atrium's chief executive and chief financial officer in both May and June "in which no offer to come on as a partner was made."

"We appreciate they have realized the gravity of their lack of communication with us, but we have in fact tried to get them to be part of our team multiple times," according to the State Health Plan statement.

"We have had several conversations with Atrium regarding the financial situation of the plan and the direction we were headed. In those conversations, clear expectations of what was needed to make things work was provided. While we understand there may be disagreements about the decisions that were ultimately made, it would not be accurate to say there has not been engagement."

The State Health Plan concluded its statement saying, "We remain committed to continuing the dialogue, and in fact, immediately set up a meeting with them after receiving their email. But still, rather than working toward finding some common ground, they decided to release a misleading public statement."

Preferred provider hospitals

Novant has a major presence in the Triad, primarily in Forsyth County, as well as Charlotte and Wilmington. It has received state health regulatory approval to open a community hospital in the Asheville area.

UNC Health has a major presence in the Triangle, as well as in Boone, Clayton, Eden, Goldsboro, Hendersonville, Hillsborough, Kinston, Lenoir, Linville, Lumberton, Morganton, Rocky Mount, Siler City, Smithfield and Valdese.

About 70% of care for State Health Plan participants occurs at facilities in 10 counties, with Forsyth and Guilford ranking fifth and seventh, respectively.

The board pointed out that Novant and UNC Health "ensure members across North Carolina have access to high-quality, lower-cost care options."

Carl Armato, Novant's chief executive, said the system chose to participate in part because the State Health Plan and Briner focused on affordability.

Armato said Novant "believes that the uncertainty of cost is also getting in the way of patients being able to access the healthcare they need and deserve. That's why we're proud to be one of the Tier 1 providers for the State Health Plan members. They've got access to new price points through a more affordable benefit network."

WakeMed acquisition bid

Because WakeMed originated as a county hospital, approval by the Wake County Board of Commissioners is necessary for any takeover.

Although Atrium and WakeMed had been in talks for at least two years, the announcement of the proposed deal on May 1 surprised WakeMed's workforce, Raleigh Mayor Janet Cowell, much of the state's healthcare sector, Gov. Josh Stein, Briner and state Auditor Dave Boliek.

Atrium would own and operate WakeMed, providing a $2 billion capital investment commitment as the primary incentive for the takeover of WakeMed's three acute-care hospitals, a rehabilitation facility and a mental health hospital.

Briner requested that Wake commissioners delay their vote, saying he has serious concerns about the deal on behalf of the State Health Plan.

On May 4, Wake commissioners voted to delay consideration of the Atrium offer for at least 90 days to give the two healthcare systems "time to engage with the community so they, along with the county commissioners, can hear residents' comments and concerns about this combination."

Another factor is that UNC Health submitted an acquisition proposal to WakeMed's Board of Directors on May 5.

Half of the $5 billion UNC Health offer over 10 years would be "tied directly to WakeMed priorities and codified through a jointly developed Wake County-focused strategic and capital plan."

WakeMed's board and executive management remain adamant that they prefer Atrium's offer and have little, if any, interest in talking with any other system, saying "that a strategic combination with Atrium Health is in the best interest of WakeMed and the communities we serve."

The treasurer's office said the "pending merger (between Atrium and WakeMed) was not related to or part of the preferred provider process."

The N.C. Justice Center said the State Health Plan's decision "to declare Atrium a non-preferred provider due to its high costs raises further doubt about the value of this deal to Wake County residents, more than 45,000 of whom work for the state government or a public university covered by the plan."

WakeMed is likely to be eligible for consideration as an access provider, which the N.C. Justice Center said is "significantly more affordable to state employees and their families than non-preferred providers like Atrium."