State Health Plan OKs premium hikes, preferred providers

On Friday, the North Carolina State Plan Board of Trustees (SHP) voted on what are being called monumental changes to the plan over the next few years, including preferred provider hospital systems, benefit changes, and premiums for 2027, and the announcement of a Third Party Administrator (TPA) and Pharmacy Benefit Manager (PBM) for 2028, in an effort to make improvements and reduce overall costs for the nearly 750,000 members covered by the plan.

“We’re beginning a new chapter in healthcare for the State Health Plan; one that’s going to evolve,” Tom Friedman, executive administrator of the SHP, said at Friday’s meeting. “The goal of today is to change the status quo. It’s moving through a different direction.”

State Treasurer Brad Briner, who oversees the State Health Plan, likened the status of the plan in 2024, when it was projected to lose $507 million in 2026 and possibly go bankrupt soon after, to the state of IBM in 1993 in which, it too was teetering on bankruptcy and slated to run out of cash. He said the company, much like the SHP in 2024, had no plan to change, no coherent strategy, but then had one of the greatest turnarounds in American corporate history because it developed a plan knowing what its strengths were and building on them.

And that, he said, is what they have been doing over the past two years: leveraging the plan’s key strengths, which are the size of the plan, engaged members, and providers that want to work with the plan and its members, which, in turn, works to help keep members healthy.

“The tactics that go with our strategy will continue to evolve,” the treasurer said at the meeting,” noting that even though the preferred providers were announced, they are still negotiating with other providers, and it isn’t too late to join the preferred provider tier.

Unc, novant, and Iredell Health included in preferred provider list

A new provider tier system including Preferred, Access, Non-Preferred, and Out of Network providers was voted on, with UNC Health and Novant Health making the cut for the preferred tier, joining Iredell Health System. Atrium Health, Granville Health, and some Duke LifePoint Healthcare facilities fall in the non-preferred category.

Friedman said an announcement will be made next week on provider access in the Triangle as negotiations are still underway between Duke Health and WakeMed.

The board also voted to approve future direct contracts between the plan and facilities for providers that meet the following requirements: provide the facility or provider preferred or access status within the plan’s network, and the facility provider must agree to rates for goods or services payable by the plan.

The goal of the tier structure is to have as many members as possible to use preferred providers, which will save the SHP and the member the most money, with an estimated savings of one-third of out-of-pocket (OOP) costs. Members who use access providers, which are mainly in rural areas, will basically have the same co-pays and deductible as they do now.

Briner continued his “going back in time” analogy to 2012, stating that members will be paying 2012 OOP prices.

“This is monumental,” he said. “It’s thousands of dollars to the average member of the State Health Plan if they participate in the Preferred Provider program. Our members know that those thousands of dollars are much more important than the $2 to $4 premium increase we will be talking about.”

Friedman told reporters they are trying to make benefits cost almost the same as they were in 2011 and 2012, and, in some respects, even less, especially when it comes to out-of-pocket costs and surgical benefits. He said money from the volume of patients going to preferred providers will cut the cost for members to see specialists

As was mentioned at last month’s board meeting, ER coverage will be the same cost across all tiers and there will be a very robust transition-of-care plan in place for those using maternity/NICU services, cancer, and transplant treatments. The timeframe, according to Friedman, is indefinite. Current PCP and behavioral health coverage will not change and will still be under the preferred status.

premium increases of 5%

The General Assembly allocated nearly $4 billion to the plan in the new state budget that became law on July 7. It includes a 5% increase in the state’s employer contribution, which raises the state’s contribution from $8,500 to $8,925 annually for each member’s coverage, or from $742.04 to $745.44 per month.

Overall, members will see a 5% increase in premiums for 2027. On average, an employee paying $50 per month whose salary increased by 5% would see their monthly premium rise to $52.50.

A further breakdown shows that active employees would pay anywhere from $1.76 to $8.04 for an individual monthly premium or $21.12 to $96.48 annually.

Medical costs, Friedman said are expected to hit 9% across the US, the highest in 17 years.

Briner said they have tried to keep premium costs nominally consistent, but with rising medical costs, they can no longer do that, but will try to keep them consistent as a percentage of compensation and will be having discussions on premiums each year going forward.

It was noted that if a member is in an area with no preferred providers, they will still be able to have access providers. Also, some members who use access providers now will actually be saving money under the changes in 2027.

Friedman stressed that the headlines shouldn’t be that premiums are going up but that the sickest plan members can save thousands per year and the healthiest members hundreds per year, and referenced the discounts provided by UNC and Novant will allow the plan’s sickest members to pay up to $7,000 less per year for healthcare.

Bcbsnc awarded tpa & pbm

The SHP board also awarded the Third-Party Administrator (TPA) and Pharmacy Benefit Manager (PBM) contracts to Blue Cross Blue Shield of North Carolina (BCBSNC) effective January 2028. This will bring BCBSNC back as the TPA after a three-year hiatus. CVS Caremark is the current PBM for the SHP. Details on the awards will be posted in another story.

“State Health Plan OKs premium hikes, preferred providers” was originally published on www.carolinajournal.com.