The deadline for hospitals to sign up for the State Health Plan’s new reimbursement contracts expired at midnight Sunday with no officially announced takers.

A financial reimbursement game of chicken commenced in October when State Treasurer Dale Folwell launched his attempt to move the SHP to a government pricing model tied to Medicare rates.

Folwell’s Clear Pricing Project would move the SHP away from a commercial-based payment model. Folwell said Thursday the contract deadline was firm with no planned expansions.

On Sunday, Folwell said that at least three hospitals, which he declined to name, requested additional information Friday. He said he identifies providers once Blue Cross Blue Shield of N.C. — which administers the SHP — confirms signed contracts.

With the deadline expiring, more than 720,000 state employees and their dependents and retirees who haven’t qualified for Medicare and their dependents may be considered as out-of-network with their local hospital and affiliated medical providers, starting Jan. 1.

However, for SHP participants, their decision-making process begins in early fall when they chose which providers they want for 2020 coverage.

Novant Health Inc. and Cone Health’s latest public comments on the reimbursement plan, made on Thursday, were that they were still reviewing it. Wake Forest Baptist Medical Center has not commented on its stance.

Novant said “it is our understanding that State Health Plan members will have an opportunity to verify provider’s network status after July 1, and before their open enrollment (for 2020) begins on Sept. 29.”

The N.C. Healthcare Association said in a statement that “we cannot advise our members on contractual matters or speak for them when it comes to the new contracts. As far as we know, none of the hospitals in the state have agreed to participate.”

Folwell said Sunday that the NCHA “has said repeatedly that no hospitals will ever sign on to reference-based pricing.”

“Reference-based pricing is intended to provide transparency in provider rates by indexing fees to a published schedule.”


The SHP contract has become one of the two main hot-button health-care issues in the state alongside the potential for expanding Medicaid coverage to between 450,000 and 650,000 North Carolinians.

The SHP contract dispute appears just as rigid on both sides as Democratic Gov. Roy Cooper and Republican legislative leaders are over the state budget bill, which does not contain Medicaid expansion and was vetoed by Cooper Friday.

It raises the question of which dispute will be resolved first, the state budget and Medicaid expansion, or the SHP reimbursement contracts.

“Perhaps the health care providers continue to hold out hope for legislative action to reverse Treasurer Folwell’s position,” said Mitch Kokai, senior policy analyst with Libertarian think tank John Locke Foundation.

The treasurer has the authority to decide on reimbursement cuts, but legislation could take that away from Folwell.

House Bill 184, which would halt Folwell’s initiative for at least a year in favor of a legislative study report, cleared the state House by a 75-36 vote April 3.

It has yet to be acted upon in the Senate since being sent to the Rules and Operations committee April 4. Senate leader Phil Berger, R-Rockingham, signaled last week he has no desire to address HB184.

“I see no quick resolution to this dispute or to the battle over Medicaid expansion,” Kokai said.


If the typical contract negotiations between private health insurers and hospitals are any indication, the out-of-network status could linger for weeks or months before an agreement is reached.

Private health insurers vs. hospitals contract disputes have often gotten heated, including filing lawsuits, as part of negotiating strategies.

“It looks increasingly as if (the hospitals and providers) will need to sign on to his plan or challenge it in court — if they believe they can make a case,” Kokai said.

The SHP is the largest buyer of medical and pharmaceutical services in North Carolina, spending $3.2 billion in 2017.

Folwell’s proposal would allow the SHP to begin paying about 61,000 providers based on a percentage above current Medicare rates, along with an additional and adjustable profit margin estimated at 82%.

“From our perspective, NCHA is deeply concerned that the Clear Pricing Project is not what the name suggests,” the group said.

“Instead, the planned changes could catastrophically alter health-care delivery in North Carolina and put state employees, retirees and their families’ in-network access to high quality health-care and financial well-being at risk.”

Phase in

The SHP plans to phase the rate changes in over a two-year period. First-year rates are projected to produce $196 million in savings, and another $62 million in year two.

The state Insurance Department gave final approval May 6 to the contracts.

According to a WRAL report last week, the SHP currently has about 15,000 contracts in place.

The new plan has at least 640 signed contracts, representing at least 15,000 providers. The contract has been available since May 13.

On Thursday, ECU Physicians signed the contract. It is the medical practice of Brody School of Medicine at East Carolina University.

On June 24, EmergeOrtho and OrthoCarolina signed the contracts.

EmergeOrtho is one of the largest physician-owned orthopedic practices in North Carolina with more than 140 physicians, 130 advanced practice practitioners and 165 physical and occupational therapists. It has 50 office locations throughout 21 counties, as well as orthopedic urgent care services across the state.

OrthoCarolina is one of the nation’s leading independent academic orthopedics practices with more than 300 providers. The practice has 31 office locations.

Other notable participants to date include: MinuteClinic facilities in CVS Pharmacy and Target stores; Rehabilitation Associates Networks; and the Community Care Physician Network, which represents 2,500 primary care clinicians.

Forsyth County Health Department signed the contract Thursday as a small provider through the SHP for clinics, dental and pharmacy.

Competing claims

Folwell, the SHP and the NCHA each claims the other side has not been willing to engage in earnest negotiations.

Dr. Michael Waldrum, the NCHA’s chairman and chief executive of Vidant Health in Greenville, has questioned the wisdom and timing of Folwell’s proposal, including to legislators.

He said the state health care system is bracing for the full impact of the latest phase of Medicaid waiver transformation between now and February.

However, the transformation could be affected by funding necessary for the rollout being unavailable as part of a potential delayed state budget after July 1.

“There’s a better way to do this, and we stand ready to help the State Health Plan with providing better quality care at lower cost,” Waldrum said.

Folwell said the NCHA “has neither stood up, showed up or spoke up about how to increase transparency and lower health-care costs.”

Folwell said the SHP will provide increased reimbursement payments to most independent primary care physicians, behavioral health specialists and many rural hospitals.

“If achieved, a 15% reduction in charges from hospitals, doctors and clinics would be quite significant,” said Mark Hall, a law and public health professor at Wake Forest University and a national health-care expert.

“I expect that these providers would be under a good deal of pressure to comply since most are unlikely to want to be dropped from the network that serves state employees ... for being too expensive.” 336-727-7376 @rcraverWSJ

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