State Health Plan moves some Atrium sites out of network after court setback

A judge ruled Tuesday against the State Health Plan’s request to pause an Atrium Health program meant to lower out-of-pocket costs for plan members.

And just hours after the written order was released Wednesday, the State Health Plan announced it would move Atrium Health’s hospitals to the out-of-network tier of its new Preferred Provider Program, citing the judge’s initial ruling.

Some Atrium hospitals would be exempt — those already designated as “access” level facilities under a September agreement, largely rural ones.

Other Atrium locations, including its urban hospitals, were placed in the health plan’s lowest, “non-preferred” tier in September. Those would be the ones moving to out-of-network.

The plan’s release framed the move as “building upon Atrium’s commitment to Plan members and enhancing its impact.” It said the change would save the “Plan hundreds of millions of dollars and, if Atrium Health keeps its commitment, will not impact member cost.”

That’s because of what Atrium said when it introduced the program last week. In Atrium’s news release, Steve Smoot, president of the North Carolina and Georgia division of Advocate Health, of which Atrium is a part, said that “regardless of how Atrium Health is categorized under the State Health Plan’s new structure, the new Atrium Health Affordability Protection Program is designed to ensure members can continue receiving care from Atrium Health at the lowest cost-sharing available under the State Health Plan.” Atrium’s plan beginning in 2027 would waive deductibles and coinsurance for plan members at Atrium and replace them with a copay.

The News & Observer has reached out to Atrium for comment and to clarify whether State Health Plan members who seek care at an out-of-network location would still see the discounts.

Out-of-network care typically means the plan covers little or none of the cost. That would leave patients to pay a much larger share themselves, unless Atrium absorbs that cost through its program.

“We understand that this back and forth is unsettling for our members, but this is all behind the scenes bookkeeping. Members should expect to have the same coverage as set by the plan over the summer,” said Treasurer Brad Briner, who chairs the State Health Plan Board of Trustees, in a news release. “One of my duties is to keep the State Health Plan financially solvent so it can continue as an incentive for teachers and state employees.

“I will not let one hospital system destroy the Plan, raise premiums on every teacher and state employee and send us into overwhelming debt.”

The new State Health Plan tiered network taking effect in January designated some hospitals as preferred; others as access (in which costs in 2027 will remain similar to this year’s), still others as non-preferred, where members would pay the most out of pocket; and finally others as out-of-network. The goal is to push members toward high-quality but lower-cost systems, plan officials have previously said. The changes come as the plan projects it could run short of money to pay its bills as soon as January 2027. The tiered network is projected by the plan to save it more than $135 million next year. UNC Health and Novant Health are designated preferred, Duke Health as an access provider and WakeMed as non-preferred.

While North Carolina Business Court Judge Matthew Houston denied the plan’s request for a temporary restraining order, the plan’s lawsuit, filed Friday, also asks the court to declare the program void and to rule that it unlawfully interferes with the treasurer’s authority to set copays, deductibles and coinsurance. Loretta Boniti, plan spokesperson, told The N&O the plan would continue to pursue the case.

Atrium has argued in court filings that its program “does not change what the Plan pays,” and that, “as it is contractually allowed to do,” it “has offered a way for patients to get out of the middle” by choosing to collect less from its own patients.

Atrium has also said it submitted multiple proposals starting in July to give the plan the same discounts preferred providers offered, and that the plan rejected them each time, The N&O previously reported. Briner has said those offers came after the plan had already chosen its preferred providers and weren’t better than the winning bids.

The N&O reached out to UNC Health and Novant Health for comment. Both systems were placed in the plan’s preferred tier after offering price concessions, with the understanding that they would get more patient volume in return, plan officials have previously said.

Under its program, Atrium would cover members’ share of costs, giving them an incentive to keep getting care there or to switch from other providers. But Atrium would not have made price concessions and would have kept charging the plan the same rates, according to the State Health Plan.

Moving Atrium out of network changes that. The plan said in its news release it will now have “little to no financial responsibility” to Atrium.

In a statement, UNC Health said through spokesperson Alan Wolf that it supports the treasurer’s efforts to protect the plan. It also said that lowering what patients pay at the point of care is “important. But if those costs simply get passed along to the State Health Plan and taxpayers, we haven’t made healthcare more affordable.“

“We’ve just changed who’s paying the bill in the short term,” he wrote.

Wolf said UNC Health “came to the table ready to do our part” by offering significant discounts to the plan. It added that it was “especially concerning” that all of this was happening during open enrollment.

The following Atrium locations are in the access tier, according to a news release from Briner’s office in mid-September, which included a document breaking down access by hospital.

Region 2 (Northern Piedmont / Triad area):

Region 3 (Greater Charlotte metro)

Region 5 (the Sandhills / South-Central NC)

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