State Treasurer Dale Folwell moved forward Monday with a contentious plan to change how the State Health Plan handles reimbursements to medical-care providers.

Folwell and the SHP said the state Insurance Department has given final approval to moving the plan to a government pricing model tied to Medicare rates.

The SHP is the largest buyer of medical and pharmaceutical services in North Carolina, spending $3.2 billion in 2017. It represents more than 720,000 teachers, state employees, the governor, current and former legislators, state university and community college personnel and their dependents, and non-Medicare retirees and their dependents.

The SHP contract would be with third-party administrator Blue Cross Blue Shield N.C.

Folwell said his proposed changes could save SHP members up to $57 million initially and $258 million overall.

In October, the plan’s board of trustees unanimously passed a resolution supporting the strategy.

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

House Bill 184, which cleared the House by a 75-36 vote April 3, would halt Folwell’s proposal while legislators conduct a joint committee study. The bill was backed by healthcare providers, lobbyists and advocates.

The bill has not been heard in the Senate.

“I think at this point, Dale is just moving forward with his plan since there has been no official action to slow the plan down,” said Rep. Donny Lambeth, R-Forsyth.

Mitch Kokai, policy analyst with Libertarian think tank John Locke Foundation, said “the treasurer, Blue Cross and all other parties need to proceed as if the transparency measures will be allowed to go into effect.”

“They would create more chaos if they simply sat back and waited for the General Assembly to take final action.”

Kokai said that even with the House passing the SHP study bill, “the Senate has displayed no sense of urgency about blocking Folwell.”

“If this latest news prompts no action in the Senate, it’s probably a good sign that Senate leaders have no appetite to step into this debate.”

Folwell’s proposal would allow the SHP to begin paying about 61,000 providers on Jan. 1 based on a percentage above current Medicare rates, along with an additional and adjustable profit margin.

Folwell’s goal has been to have providers sign up for the new payment system by June 30. Contracts are to be mailed this week.

“This approval is an important step in getting state employees, retirees and taxpayers like them who fund this plan, the transparency and prices they’ve deserved for decades,” Folwell said in a statement.

Blue Cross NC contracts with health care providers and intermediaries to deliver covered medical services to plan members.

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

“The new contract will also provide for clear pricing for medical services, allowing members to consume health care instead of it consuming them,” according to the news release.

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