Fight over health care plan may mean bigger bills for NC teachers, other state workers

Aug. 7--Major hospital systems in Charlotte, Raleigh and elsewhere in North Carolina have rejected a new proposal to remain in-network providers in the State Health Plan -- meaning teachers and other state workers could start paying higher rates next year.

Two deadlines for hospital systems to sign up for the state 2020 plan have come and gone, with the most recent being Monday at midnight.

The state and the hospitals are fighting over the power to set prices. State Treasurer Dale Folwell, whose office administers the plan, says he wants consumers to understand what they're paying for in health care under rates set by the state. But many N.C. hospitals have refused to sign the plan, and want to focus more on preventative care instead of price changes.

The State Health Plan, administered by insurance company Blue Cross Blue Shield of North Carolina, serves more than 720,000 people in North Carolina -- including close to 39,000 in Mecklenburg County and more than 93,000 in Wake County.

The original deadline for health care providers to sign a contract with the State Health Plan -- agreeing to the state-set payment rates -- was July 1. Folwell reopened that deadline, to Monday night.

Since neither of Charlotte's major hospital systems, Atrium Health and Novant Health, signed on to Folwell's "Clear Pricing Plan," they would be considered out of network for state employees in 2020.

State-owned hospital system UNC Health didn't sign on to the plan either, even after a Monday meeting with Folwell.

Only five hospital systems have signed on to the plan, Folwell said in a media call Tuesday: CaroMont Health in Gastonia, Randolph Health in Asheboro, North Carolina Specialty Hospital in Durham, Martin General Hospital in Williamston and Catawba Valley Medical Center in Hickory.

Folwell hasn't said what the state will do next to ensure state employees have adequate in-network medical coverage. But he said that hospitals haven't offered an alternative plan.

Atrium told the Observer it is committed to providing care for patients, and sent an alternative proposal to State Health Plan officials in June. The company didn't immediately share the plan with the Observer.

"We hope the State Treasurer and the State Health Plan will be open to collaboration to find a reasonable and cost-conscious solution that benefits all residents of North Carolina," Atrium Health said in a statement.

Novant, Charlotte's second-largest hospital system, also said it would keep working with Folwell. "We will continue to offer the Treasurer our assistance to create a plan that improves the health of state employees while addressing costs and increasing transparency," Novant said in a statement.

'Devastating' effects

People like Cabarrus County teacher Michael Landers could be caught in the middle of the fight, and end up paying a lot more for health care next year.

His family still owes money to Atrium Health after his wife gave birth to their second son two years ago. Both of his sons, 4-year-old Maddox and 2-year-old Ryker, spent time in Atrium's Neonatal Intensive Care Unit.

All of Landers' doctors are affiliated with Atrium. They're in network with his insurance through the State Health Plan. But that would change in 2020. The nearest hospital that has signed on to the new state plan, CaroMont in Gastonia, is an hour drive from Landers' home.

When Landers was nearly unconscious from extreme hypoglycemia due to Type I Diabetes last year, the ambulance took him to an Atrium hospital five minutes from his house.

The ambulance ride and two-hour hospital visit cost over $19,000, he said. But because the hospital was in network, he ended up paying about $2,000 on a payment plan after insurance.

"Atrium not being in network would be devastating," Landers said.

When Landers and his wife Lindsey, also a Cabarrus County teacher on the State Health Plan, had their first child, Lindsey's water broke six weeks premature, Landers said.

"We had no idea what was going on," Landers said. "We didn't know if we had lost the child, or what was happening. We got immediately into Atrium's NorthEast hospital in Concord."

Their son Maddox was born the next morning, and stayed in the Neonatal Intensive Care Unit for six weeks. Landers said he can't imagine the cost if Atrium was out of network.

'Civic obligation'

Charlotte-based Tryon Medical Partners was the first health care provider group to sign on to the State Health Plan.

The independent practice had sued Atrium Health in 2018 to be able to break away from the hospital system.

The state's reimbursement rates in the plan outlined under the first deadline would basically break even with costs for Tryon Medical Partners, Tryon Medical Partners CEO Dale Owen said. "We felt a civic obligation to take care of our teachers and the other people in the state that take care of the rest of us in so many other ways," Owen said.

He said he believes big hospital systems aren't signing on to the plan because it may not increase profits in all cases.

The State Health Plan would pay medical providers about 196% of Medicare rates on average, an increase over the rate of 182% that was in the state's initial proposal to providers.

The State Treasurer said the latest proposal would save taxpayers $166 million and plan members $34 million because hospitals would not be able to negotiate their own rates.

Folwell says the plan uses Medicare prices as a reference to set rates. Medical providers and hospitals joining the plan have to agree to accept the state-set prices, which would be set at almost double Medicare prices on average.

But many medical providers and insurance companies are moving toward "value-based pricing" -- prioritizing preventative care and basing price on the value of services provided to patients, not the quantity.

Folwell said hospital systems have complained that the State Health Plan doesn't use value-based pricing. But he said the state needs to know what services it is paying for before moving to cost-saving methods like bundling -- lowering costs by grouping related health care services.

What's next?

A bill calling for a financial study of the proposed State Health Plan passed the North Carolina House of Representatives in April, the Winston-Salem Journal reported.

House Bill 184 would create a committee to study the sustainability of the plan and delay its implementation. But the bill has been stuck in a Senate committee since April.

Folwell has said the new plan would give power back to state employees.

"We have a medical arms race in North Carolina," Folwell said. "Where no one in this state consumes health care. It consumes them."

Landers, the Cabarrus teacher, disagrees. "How can you be a better consumer when the products, the health care needs, are slashed tremendously?" Landers asked. "You don't become a better consumer with less options."

In his media call Monday, Folwell wouldn't say what the state would do if hospitals continue to refuse to join the plan.

"Stay tuned," he said.

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