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Treasurer says state employees won't pay out-of-network costs

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State Treasurer Dale Folwell discusses health care costs during a public meeting in Greenville in Aptil. Folwell wants to reform the system that funds health care for state employees, teachers and retirees, but has met with resistance from North Carolina hospitals, represented by the North Carolina Healthcare Association.

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Ginger Livingston

Sunday, July 21, 2019

Even though none of the state's major hospital systems joined the revised North Carolina Health Plan Network, its members won't pay out-of-network costs when the new plan launches on Jan. 1, the state treasurer said.

However, State Treasurer Dale Folwell, the man behind the effort to reform the system that funds health care for state employees, teachers and retirees, offered few details about how those hospitals will be compensated for caring for those individuals.

"We are continuing to work to get everybody in the plan and we've got a little bit of time to make that happen," Folwell said.

His office is still working with individuals and groups that tried to sign up for the new plan but for one reason or another missed the deadline.

"We have a loyalty and duty of care to our members," Folwell said. "We continue to be focused on the fact that we can no longer be involved in secret deals and continue to raise the cost of health care.

“State employees being out of network is, in my opinion, not something that exercises duty of care to them.” he said.

The State Health Plan provides health care coverage for more than 720,000 state employees, teachers and their dependents.

Folwell wants to reduce the reimbursement rate the State Health Plan pays hospitals and health care providers beginning on Jan. 1. Folwell said the change will save taxpayers $300 million and plan members $65 million annually.

North Carolina hospitals, represented by the North Carolina Healthcare Association, are opposed to Folwell's plan, saying it will cause them to lose money. Vidant Health CEO Michael Waldrum has said that system stands to lose $38 million in reimbursements.

Folwell's plan is a reference-based pricing system that pays hospitals and providers a fixed rate for health care. The rate typically is based on what Medicare will pay for a service with a multiplier added.

For the reimbursement rates to Vidant, the average is 182 percent, almost double what Medicare's reimbursement rates are, Folwell said.

"You should ask them why they provide workers comp medical services at a 40 percent profit, they provide services to prisoners at 40 percent profit but they won’t provide state employees services at 80 percent profit on average,” he said. “The decision to be out-of-network rests with them.”

Vidant Health released a statement saying there are better solutions for state employees and retirees.

"As we continue to evaluate the contract, it will be necessary to consider how this plan will restrict access to care for the communities we serve,” the statement said.

Vidant and other hospitals, including the UNC Health System, want to negotiate a different plan. Folwell said that's impossible because Vidant and other systems won't provide information on their pricing structures. Part of Folwell's plan is to build on federal law requiring hospitals to publish prices for procedures so health care consumers can understand procedures' cost.

Folwell said recent reports that he is not meeting with medical providers to discuss the plan and options are "patently false.”

“We have more than 27,000 medical providers who have signed, and we have had dozens and dozens of meetings with hospitals, legislators and stakeholders," Folwell said. "We have answered every call, email and attended every meeting. We will meet with anybody, anytime, anywhere.”

When asked if his office was still meeting with Vidant, Folwell said, "It seems like Vidant is preoccupied with other things these days."

When asked to clarify his statement, Folwell said, "all the stuff you’ve been reporting on," a reference to ongoing reports about Vidant Medical Center's lawsuit involving the UNC system and East Carolina University over appointments to the hospital board of trustees. He also referenced Vidant's decision to close next month its 19-bed behavioral health unit at Vidant Beaufort Hospital next month.

Vidant is supportive of a bill before the General Assembly that would postpone implementation of Folwell's plan so the current system can be examined and a committee can work on creating a new method of compensating hospital and medical providers.

The legislation passed the state House in April but since then has been stalled in the Senate rules committee.

Bill D'Elia, a spokesman for Senate President Pro Tempore Phil Berger, said the senator does not believe the General Assembly should be micromanaging the state employee health insurance program.

“Years ago, the General Assembly delegated authority to manage the State Health Plan to the State Treasurer," D'Elia said. "The Treasurer determined that changes were necessary to ensure the long-term viability of the State Health Plan and providers need to work with the Treasurer towards a solution. Kicking the can down the road is not a solution and will likely result in the same situation at a later date."

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