Reduced health costs coming in 2020

By: Jael Pembrick - Staff writer

RALEIGH — A new strategy is finally coming to health care — State Treasurer Dale R. Folwell announced Thursday that the State Health Plan will be changing its payment system that, in turn, will reduce costs for members. It is a launch of a new medical reimbursement strategy for North Carolina providers.

The goal is to provide transparency and quality healthcare to its members and to generate savings of $300 million — the results will save them more than $60 million. Starting on Jan. 1, 2020, the Plan will move away from a commercial-based payment model to a reference-based government pricing model based on a percentage of Medicare rates to reimburse health care providers for their services. This plan will make it possible to reduce premiums for state employees and their dependents.

“We have enough money, needs and providers to lead the nation in improving the quality of care, increasing transparency and reducing costs,” added Folwell. “Many have been talking about this for years and calling for ‘someone’ to do ‘something’ about this problem. The time to act is now.”

Plan providers hope to follow some of the steps of Medicare, which has a standard reimbursement measurement that is clear and adjusts for provider differences. Reference-based pricing is intended to provide transparency in provider rates by indexing fees to a published schedule. The movement to a referenced-based pricing model aligns the Plan appropriately as a government instead of a commercial payer.

The release states that the Plan has used Blue Cross-Blue Shield and its commercial network of providers, which consider fees charged to members confidential. This means the medical fees charged are not provided to the Plan or its members despite the fact that there are state and federal guidelines that demand transparency.

The Plan has an annual budget of $3.3 billion and wants a more predictable and transparent system when working with health care providers, unlike how providers are paid today. The Plan also expects that some providers will see fee increases under the new rate structure, such as primary care providers, mental health providers and critical access providers.

Thursday letters were sent to provide updates on the changes. When they come into affect, providers who choose to not partner will result in higher out of network costs for members who choose to stay with those providers.

“It’s not enough to just talk about it, someone has to fix it,” said Folwell. “If they are not willing to provide health care to teachers, public safety officers and others who provide the core functions of government at a reasonable profit, then shame on them.”

Jael Pembrick can be reached at 910- 506- 3169 or [email protected]


Jael Pembrick

Staff writer