The second most contentious health care issue in North Carolina this year behind Medicaid expansion is the proposed changes to the State Health Plan. The State Treasurer Dale Folwell and the Board of Trustees for the Plan set out to change the way that the State Health Plan pays for the services for over 700,000 current and retired state employees. I have written about this change, what the Treasurer calls the Clear Pricing Project, several times throughout the year: 

The Clear Pricing Project pertains to the State Health Plan (SHP), the taxpayer-funded health plan that covers over 700,000 public sector employees and retirees. Currently, the SHP uses a commercial-based plan administered by Blue Cross Blue Shield of North Carolina (BCBSNC) and United Healthcare. Under the current plan, claims are processed by BCBSNC and paid for by the SHP. (For more information, check out my primer on the topic I wrote late last year and some other pieces here and here.)

The Clear Pricing Project would change the SHP from a commercial-based plan to a reference-based plan. In a reference-based plan, there is a maximum rate set for how much the SHP will pay a provider for a given procedure. In this case, the Clear Pricing Project would use Medicare as the reference and pay providers an average of 182 percent of Medicare’s payment. After hearing concerns about the plan’s impact on rural hospitals, Folwell raised reimbursement rates for these facilities to 200 percent of what Medicare pays for the same service. While some hospitals would see a reduction in reimbursement, many providers, such as independent physicians and mental health providers, would receive an increased reimbursement rate under the new plan.

The deadline for providers to sign up for the new plan, and be considered “in-network” for state employees passed on June 30th without any of the major hospitals signing on to the new plan. Large hospital systems have been the most vocal against this plan citing extreme cuts from the SHP and more rural facilities fearful of closing down due to the proposed cuts. 

Yesterday, the Treasurer put the ball back in the court of the major hospital systems that have not signed up. The Treasurer announced that the sign-up period would be reopened and the reimbursement to providers would be increased: 

State Treasurer Dale R. Folwell, CPA, and the State Health Plan (Plan) announced today that the State Health Plan Network is reopening the time for medical providers to sign up for the State Health Plan Network. Additionally, the Plan is increasing its payments to some rural and urban hospitals. paying, on average, almost double the amount paid by Medicare. Medical providers will have between July 26 – August 5 at midnight to sign onto the new, enhanced State Health Plan Network.

This latest announcement comes after the Plan announced in March that it was adjusting rural hospital rates to address concerns of some that the Clear Pricing Project (CPP) could negatively impact rural healthcare. The new reimbursement rates announced today will further increase some “rural” hospitals rates as well as increase payments to urban hospitals.

The new proposal increases payments to medical providers, on average, from 182 to 196 percent of Medicare. Urban hospitals will see their combined inpatient/outpatient ratios go from 178 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 Treasurer’s goal in making this change was to save state employees on out-of-pocket costs and save taxpayers money as they are the ones that pay for the plan. It remains unknown if this will be enough to get the rest of the hospitals that haven’t signed up to join the plan and offer state employees “in-network” care.