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Deadline passed, but standoff continues between hospitals, State Health Plan

Just three hospitals in the state have signed on to a revamped State Health Plan to provide cheaper health care for hundreds of thousands of state employees, teachers and retirees.

Posted Updated
N.C. health, mental health, Medicaid generic
By
Travis Fain
, WRAL statehouse reporter
RALEIGH, N.C. — Monday's deadline to bring North Carolina health providers on board with a major shift in the state's largest health insurance plan came and went with just three of the roughly 100 hospitals in the state signing on.

So what now?

"Stay tuned," said State Treasurer Dale Folwell, who is pushing the change to save taxpayers and state employees hundreds of millions of dollars on health care.

“We’re still a long way off from a panic-button scenario," said Robert Broome, executive director of the State Employees Association of North Carolina, which backed Folwell's play and joined him in a standoff against hospitals across the state.

The State Health Plan is the largest purchaser of health services in North Carolina, covering more than 700,000 state employees, retirees, teachers and their dependents in a self-funded plan paid for, in part, by taxpayers. Folwell wants to cut costs by ending a long-standing practice of negotiating deals in secret with hospitals and instead paying for health care by setting standard rates for services.

He'd pin those rates to what Medicare pays, adding an average of 82 percent.

This has been the plan since last year, when the board that oversees the State Health Plan gave its unanimous support. It's supposed to take effect Jan. 1. Open enrollment is supposed to start at the end of September.

The deadline for hospitals and other providers to sign the new contract was supposed to be Monday. It's not unusual for hospitals and insurance providers to fight over contracts – or for those fights to bust through deadlines. The July 1 deadline was essentially an arbitrary one, but both sides are dug in.

Folwell referred to the state's hospitals this week as "a cartel." A spokeswoman for the North Carolina Healthcare Association, the hospitals' lobbying group, called Folwell's health plan a "pricing scheme."

The current State Health Plan has deals with some 65,000 providers. Folwell said this week that the new one got agreements from about 25,000 of them, including three hospitals.

The Winston-Salem Journal, which reported on these issues earlier this week, identified the three as North Carolina Specialty Hospital in Durham, Martin General Hospital in Williamston and Randolph Health in Asheboro, which has struggled financially and is looking to partner with a larger health care group.

"As Randolph Health continues work to secure a partner, we aren’t in a position to decline anything that is advantageous for the citizens of Randolph County and for Randolph Health," a hospital spokesperson said in a statement. "While participating in the State Health Plan has a positive impact on our organization, our focus continues to be on securing a partner to ensure this community has access to local, high-quality health care."

If nothing changes, hospitals and doctor groups that didn't sign on would be out-of-network for state employees and others on the State Health Plan come next year, either increasing out-of-pocket costs for plan members or reducing their access to care.

Both Folwell and the hospitals have asked state employees to exert pressure on the other side. The hospitals, through a dark money group that the Healthcare Association created called Partners for Innovation in Health Care, have been funding an advertising campaign against Folwell's changes. Last month, WBTV revealed that UNC Health Care, a state-owned hospital system, contributed more than $58,000 toward that campaign.

The money was refunded, and UNC Health called the payment an "administrative oversight" after the station asked questions. SEANC's Broome called the explanation ludicrous.

UNC Health that submitted a counter-proposal to Folwell's "Clear Pricing Project" late last week, sending the Treasurer's Office a five-page outline for its preferred plan and sharing it with Gov. Roy Cooper's office and legislative leaders as well. Cooper has been largely on the sidelines, at least publicly, in this fight, but his spokesman said this week that Folwell's "plan requires more study and negotiation, and more time is needed to do that," signaling hopes for a delay.

A bill to do just that – delay any changes and study the way forward – cleared the state House in April, but Senate leadership has said the bill is not likely to move forward there, and the proposal hasn't gotten a committee hearing.

Folwell, in the Winston-Salem Journal, called UNC Health's counter-proposal “a silly back-to-the-future strategy that was presented to the previous treasurer and State Health Plan administration over three years ago and was rejected because of its lack of transparency and no concrete, measurable savings to the plan.”

A UNC Health spokesman said the plan "achieves many of the principles" Folwell has outlined and that it expected the ideas in it to be "broadly welcomed" by other hospitals. The spokesman said this week that, not only did the hospital system not sign Folwell's new contract, but that it would not.

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