North Carolina folds to provider pressure with insurance plan shifting away from set rates

By | August 12, 2019

Dive Brief:

  • North Carolina’s state treasurer announced major state hospital systems will be in-network in the state’s insurance plan for more than 720,000 teachers and state employees, bowing to provider pressure.
  • The state proposed a plan last year that would set reimbursement prices based on Medicare rates, almost double such rates on average. A number of North Carolina health systems, including market giants Atrium, UNC Health and Novant, refused to sign onto the plan, which would have left state workers facing huge out-of-network bills if they received care at those facilities.
  • The new hybrid network announced Thursday will consist of more than 68,000 providers. The initial proposed State Health Plan network included only 28,000.

Dive Insight:

Under the new plan, providers that didn’t sign onto the state’s health plan will keep their previous agreements with Blue Cross Blue Shield of North Carolina, which administers the state plan, called the Blue Options Network.

State Treasurer Dale Folwell announced his ‘Clear Pricing Project’ in October in an attempt to cut down the state’s healthcare spending: $ 3.3 billion annually for insurance. At current spending rates, the state health plan is projected to run out of money by 2023.

However, provider interests were dead-set against a move from fee-for-service to reference-based government pricing based on a percentage of Medicare rates. The North Carolina Health Care Association spent millions of dollars on lobbying opposing the plan, arguing it would put rural hospitals out of business — a common provider argument on the national stage against ‘Medicare for All’.

Rate setting is also a key issue in efforts to ban surprise medical bills. Some draft legislation currently in Congress would create benchmark payments for out-of-network services based on Medicare pricing as well. Provider groups like the American Hospital Association have spoken out strongly against such proposals.

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Folwell’s plan would have increased payments to providers on average from 182% to 196% of what Medicare pays, according to the State Department of the Treasury.

However, though the state extended the deadline providers had to sign up twice, very few actually did so. The latest deadline passed earlier this week.

Despite its unpopularity, Folwell applauded the providers, including five hospitals, that signed onto the state plan. Those providers will eventually have an opportunity to participate in alternative payment arrangements such as bundled payments or becoming involved in an accountable care organization.

“I appreciate that 28,000 providers — independent primary care providers, behavioral health providers, independent provider networks and the 5 courageous hospitals – have chosen to provide care to those who serve in state government,” Folwell said in a statement.

Open enrollment for the hybrid plan begins in the fall, and coverage begins Jan. 1.

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