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Treasurer alters State Health Plan to lure more hospitals

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N.C. Treasurer Dale Folwell

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Ginger Livingston

Tuesday, July 23, 2019

The state treasurer announced on Monday that he is increasing payments under his reformed State Health Plan and is reopening the sign-up period after many of the state’s hospital systems refused to join.

The refusal would mean that thousands of state employees, including those who use UNC Health Systems and Vidant Health, will possibly have to pay more expensive out-of-network costs for hospital services and leave them with few options.

The announcement by Treasurer Dale Folwell comes three weeks after the original deadline to sign up for the plan. Only three hospitals statewide joined the network.

The State Health Plan is undergoing a change starting on Jan. 1 in an effort to address liabilities to state taxpayers. The plan no longer will follow a fee-for-service model. Folwell is switching to a reference-based pricing system that pay 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.

The plan is called the Clear Pricing Project because it also will require hospitals to publish their prices in an what it reports is an easy-to-understand formula.

More than 27,000 providers, including ECU Physicians, joined the network, the treasurer’s officer reported. A news release said in most instances they will larger payments than they do now. Hospitals report they likely will receive a smaller reimbursement.

Earlier this year Vident CEO Mike Waldrum said Vidant would lose $40 million. When Folwell adjusted the reimbursement formula in March, Vidant’s loss dropped to $38 million. State hospital officials point out that public and non-profit hospitals point out that the drop in reimbursements will disproportionately affect them because they are required by federal law to care for anyone regardless of ability to pay, which costs them tens of millions annually.

The new proposal increases payments to medical providers, on average, from 182 percent to 196 percent of Medicare, the treasure’s news release said. Urban hospitals will see their combined inpatient/outpatient ratios go from 178 percent to 200 percent of Medicare on average. Hospitals will receive an additional $116 million from the proposal announced in March. State taxpayers will save $166 million and plan members will save $34 million in reduced costs.

“The decision to readjust rates comes after many meetings and discussions with hospital officials and others,” Folwell said in the release. “We’re very pleased that 27,000 medical providers have signed onto the Clear Pricing Project. However, we realize that our members need to have additional hospitals for the plan to have coverage. This final offer is very generous; almost doubling the rate that Medicare pays providers.”

Vidant leaders in a statement Monday said they were evaluating the contract.

“Unfortunately at this late date, the treasurer continues to modify his plan without bringing all parties together,” a statement released by Vidant said. “He changed his plan in March in an attempt to lessen the impact on rural hospitals. Vidant went from a $40 million cut to a $38 million cut. 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. Creating the right solution for complex issues requires thoughtful discussions with all parties engaged and at the table.”

Vidant said it wants a process that is described in House Bill 184, which would prevent the Jan. 1 implementation of the network changes so a joint legislative committee can study and redesign the State Health Plan Network.

“HB 184 would bring all parties together to design thoughtful solutions to resolve the State Health Plan’s liabilities,” Vidant said.

The bill passed the House but is stalled in the Senate. A spokesman for Senate President Pro Tempore Phil Berger said last week the Senate leader doesn’t believe the General Assembly should be involved in managing the state health plan.

Folwell said he will ask the State Health Plan Board of Trustees to create an advisory committee of health care professionals and others to recommend changes going forward, including the consideration of alternative payment models.

The State Health Plan, which is operated through the treasurer’s office, provides health care coverage to more than 727,000 teachers, current and former lawmakers, state university and community college personnel, active and retired state employees and their dependents.

According to Folwell’s office, North Carolina taxpayers spend more than $3.4 billion annually on health care for active and retired state and local government employees.

Medical providers will have between Friday and Aug. 5 at midnight to sign onto the network.

Contact Ginger Livingston at glivingston@reflector.com or 252-329-9570.

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