Legislative leader urges halt to State Health Plan provider tiers

House Majority Leader Brenden Jones, R-Columbus, is urging State Treasurer Brad Briner and the State Health Plan Board of Trustees to halt a new provider-tier system, warning that it would make local care more expensive for rural members and weaken community hospitals.

In a letter to Briner, Jones said “a substantial number of House members” are alarmed by the policy, which takes effect Jan. 1, 2027. Jones did not identify those lawmakers in the letter.

“The State Health Plan serves members in all 100 counties,” Jones wrote. “It should not use their health benefits to punish them for living in rural communities, force them away from trusted physicians, or steer patients and revenue toward a handful of favored hospital systems.”

Jones represents House District 46, which includes Columbus and Robeson counties, and is serving as House majority leader during the 2025-26 legislative session. Briner chairs the State Health Plan Board of Trustees.

Under the new system, providers will fall into three in-network categories — Preferred, Access, and Non-Preferred — in addition to the existing Out-of-Network category.

Members who use Preferred providers will pay lower deductibles, copays, and out-of-pocket maximums. Access providers will generally cost members the same as they do under current benefits, while members who continue using Non-Preferred providers will face “a significant out-of-pocket cost increase,” according to the plan.

The board approved the tier strategy in March as part of an effort to steer members toward lower-cost providers. Trustees finalized the 2027 structure in July, approving Preferred Provider agreements with UNC Health and Novant Health. Duke Health later reached an agreement to participate as an Access provider.

The State Health Plan provides coverage to nearly 750,000 teachers, state employees, retirees, university and community college personnel, lawmakers, and dependents.

Jones argued that the different cost-sharing levels are intended to move patients and revenue away from providers that did not receive preferred status.

“This is not a neutral adjustment to insurance benefits,” Jones wrote. “It is the deliberate use of the State Health Plan’s purchasing power to pick winners and losers in North Carolina’s health care market.”

Jones pointed to the Columbus Regional Healthcare System as an example. He said the hospital was classified as Non-Preferred while UNC Health and Novant facilities in surrounding counties received Preferred status.

State employees and retirees in Columbus County would therefore pay more to continue receiving care locally, or travel farther to see a provider favored by the plan, Jones said.

“Patients who have spent years establishing care with local physicians will be forced to choose between paying more or traveling farther to begin again with unfamiliar doctors,” he wrote.

Jones said that choice is especially difficult for patients receiving specialty care, managing chronic illnesses, or recovering from major procedures. He cited his wife’s experience following major surgery and said she has an established treatment plan with doctors familiar with her condition.

Using a Preferred provider could require more than an hour of travel and the abandonment of those physicians, Jones said.

“Her experience is only one example of what thousands of rural families may face,” he wrote.

Plan officials have said they are developing transition-of-care procedures for members undergoing certain treatments when the tiers take effect. Emergency care is also expected to cost members the same regardless of a hospital’s tier.

Jones called for broader continuity-of-care protections covering patients recovering from major procedures, receiving specialty treatment, or managing chronic conditions.

He also warned that steering insured patients away from rural hospitals could threaten services that depend on revenue from scheduled procedures, imaging, specialty care, and other nonemergency treatment.

“A rural hospital does not have to close its doors for a community to lose meaningful health care,” Jones wrote. “It can eliminate obstetrics, stop performing surgeries, lose specialists, reduce inpatient capacity, and become little more than an emergency room and a transfer station.”

The policy could also accelerate consolidation by placing rural and independent hospitals under pressure to reduce services, merge, or sell to larger health systems, Jones said.

“The State should not create the financial pressure that drives rural hospitals into the arms of favored systems and then pretend the resulting takeovers were the product of a free market,” he wrote.

State Health Plan officials have said the tiered structure is designed to increase price competition among providers and reduce overall costs for both members and the plan. Under the agreements, UNC Health and Novant Health accepted discounted reimbursement rates in exchange for Preferred status within the network.

Plan administrators have defended the selection process, saying they spent months negotiating with health systems and other providers to secure lower-cost arrangements. Officials have also noted that roughly 4,500 providers were designated as Preferred and have argued that providers who chose not to accept the plan’s terms should not receive the same cost-sharing advantages.

The changes come as the State Health Plan continues to face long-term financial pressure. While officials have pointed to earlier benefit adjustments and premium changes as steps that helped address a projected $507 million shortfall, the plan was still anticipating a $58 million gap for fiscal year 2027 prior to the most recent round of network and benefit restructuring.

Jones acknowledged the need to control expenses but said the tier system shifts costs onto rural patients, families, and local economies rather than eliminating them.

“Rural North Carolinians should not be sacrificed to improve a spreadsheet in Raleigh,” he wrote.

Jones asked Briner and the board to suspend the Non-Preferred classification for rural hospitals until the plan can demonstrate that comparable care is available within a reasonable travel distance.

He also requested an immediate meeting between plan officials and lawmakers representing rural communities and called for implementation to stop until the potential effects on patients, physicians, and hospitals are examined.

In response to the letter, Loretta Boniti, a spokesperson for the treasurer’s office, pointed to continuing negotiations between the plan and Atrium Health.

“As we have publicly and jointly stated, the State Health Plan and Atrium Health are currently in negotiations,” Boniti said in a statement to Carolina Journal. “Atrium has presented the Plan with several options for consideration, and we are working toward finding a solution that is viable for both entities. We appreciate Atrium coming to the table with offers that put our members’ health care first.”

State Health Plan members are scheduled to receive updated provider directories and educational materials before open enrollment, which runs Oct. 12-30.

“Legislative leader urges halt to State Health Plan provider tiers” was originally published on www.carolinajournal.com.