By Lindsay Wagner
When Wilkes County middle school librarian Susan Ringo recently had a stroke, she came through the medical crisis only to learn she had other undiagnosed congenital health issues that will require a lifetime of medical care at no small cost. She had planned to rely on the State Health Plan to keep herself both physically and financially alive.
But at the same time, a pitched battle between the state treasurer and hospitals across North Carolina over health care costs is now coming to a head—and teachers and state employees like Ringo are finding themselves caught in the middle.
“Your chosen deadline [July 1, 2019] for hospitals and health systems has passed and NONE of the hospitals I am relying on to save my life have signed on to the [State Health Plan],” Ringo wrote in an email to state treasurer Dale Folwell this week. “I need you to understand that this game of brinkmanship that you are playing with these hospitals is one that only serves to hurt teachers and state employees and threatens the health and well-being of real people in the state you are elected to serve. I know I am not the only person in this truly terrifying situation,” said Ringo.
The July 1 deadline for health care providers to sign up to participate in the proposed State Health Plan contract—a date set by the state treasurer—has now come and gone with only three hospital networks signing up for a contract that’s set to begin on January 1, 2020.
The vast majority of North Carolina’s hospitals and their affiliated health care networks have thus far opted out of signing on to the new plan, known as the Clear Pricing Project, including large hospital networks like UNC Health, Duke, Atrium Health, Cone Health and more. Folwell’s proposal attempts to rein in what he says are hospitals’ secret contracts and high health care costs by tying the State Health Plan’s reimbursement rates for medical services to 182% of Medicare’s reimbursement rates. Currently, Folwell says, the State Health Plan pays providers at rates the providers themselves set without disclosing the actual cost of services.
A continued impasse between the hospitals and the state treasurer could result in a large swath of North Carolina health care providers becoming out of network for the bulk of teachers and state employees participating in the State Health Plan, resulting in deductibles and out of pocket costs that could as much as double or worse.
“I do see this as a two-sided issue,” said Cabarrus County high school English teacher Mike Landers, who says that he understands Folwell’s desire to rein in the pricing problems in the health care industry. “But the state employee is caught in the middle of a massive game of chicken. Who will blink first?”
Landers is a Type I diabetic who estimates that if he didn’t have access to the State Health Plan, he’d need a job that pays far more than the salaries that he and his wife, also a teacher, earn to manage the costs associated with being a diabetic. A bottle of insulin alone, he says, costs $400 full price. Landers can manage a $30 co-pay for that medicine, but if his provider network, which is Atrium Health, becomes out of network, he doubts he’ll be able to access the health care he needs to keep his disease in check.
“In Cabarrus County, our hospital is in the Atrium Health network,” said Landers. “But my regular doctor is also affiliated with the Atrium Health network, which has bought up many family doctor operations in this area. They have a strong foothold on everyone’s health care.”
According to this 2019 State Health Plan comparison document, the in-network deductible for 80/20 plan subscribers is $3,750 for families, and primary care physician office visit co-pays are $25. If a participant goes out of network for care, the family deductible would grow to $7,500 and there would be no copay option for a physician visit; only 60% of services would be covered after first meeting the annual deductible. And the out-of-pocket maximum for a family doubles when going out of network, from $14,670 to $29,340.
The prospect of these figures becoming a reality has Landers shook.
“Even a minor health insurance increase will cause issues; but if we all became out of network for everything because someone couldn’t reach a deal — that’s jeopardizing the health of everyone in the State Health Plan,” said Landers.
But State Treasurer Folwell says the reason he’s pushing the Clear Pricing Project is because teachers and state employees have had a raw deal for too long.
“We are spending billions of teacher and taxpayer money on something where the contracts are secret. And those secret contracts have led to higher costs,” said Folwell in an interview with the Public School Forum.
The size of the State Health Plan — more than 700,000 participants — is a key point, says Folwell, and it offers leverage. “This plan has almost as many participants as all the employees in the United States who work for the three following companies: Berkshire Hathaway, JP Morgan and Amazon,” said Folwell, who also explained that if high costs persist, the state health plan is on track to become insolvent.
The size of the plan may be why Folwell feels he’s in a position to drive a hard bargain with large hospital networks in the state — but they’ve banded together in opposition. Only Randolph Memorial Hospital, Martin County Hospital and an unidentified third hospital [the Winston-Salem Journal reports that the third hospital is N.C. Specialty Hospital in Durham], along with 27,000 mostly individual providers have signed up thus far for Folwell’s contract offer. Large hospital networks have scooped up the majority of the state’s health care providers, and none of the big ones have signed on.
UNC Health Care says they offered Folwell a counter proposal that specifically addresses the transparency in pricing issue that he has raised. But Folwell says it’s an alternative plan they pushed three years ago and fails to offer any real savings. [You can read UNC Health’s alternative, which has been sent to the state treasurer as well as leaders in the General Assembly and Governor Cooper, by clicking here.]
Cone Health, based in Greensboro, has said in a statement that a projected $26 million in lower SHP reimbursement would “reduce, and in some cases eliminate, services we provide daily. Thereby, risking our ability to invest in the future,” according to the Winston Salem-Journal.
No other hospitals have offered counter proposals to his proposed contract, Folwell said, and that he has adjusted downward the amount of savings contained in the proposal twice.
“We’re dealing with a cartel,” Folwell said of the hospital networks.
Perhaps realizing the potential for a crisis, House lawmakers passed a bill in April to delay the implementation of the new contract proposal for a year, and have lawmakers study the state health plan’s design in the meantime.
But Senate leader Phil Berger has said his chamber won’t consider the bill.
“Senator Berger thinks that the hospital industry and the treasurer should continue their negotiations, and he would be hesitant to involve the legislature in micromanaging a plan that we authorized the treasurer to manage just a few years ago,” spokesman Pat Ryan told the Carolina Journal.
Whether or not hospitals or the state treasurer is to blame is neither here nor there, as Union County elementary math teacher Kathleen Zwally sees it.
“We can’t be pawns in a game of who will give in first,” said Zwally.
She and her husband are both teachers, so there’s no other health insurance option, really. Open market plans through Blue Cross Blue Shield were an astronomical monthly cost, Zwally found. So she decided to send an email to Treasurer Folwell.
“Hello, It is my understanding beginning Jan 2020, due to moving to a set rate schedule rather than paying providers what they charge, many doctors and hospitals are not signing up to be providers with the state health plan insurance,” wrote Zwally. “From my understanding, no one in my area will be in network. This makes my family coverage a $9,000 out of pocket deductible before kicking in to pay 60% of the bill. Looking at past and proposed teacher payscales, this could bankrupt our family!”
“You have been hurt for decades with a health plan that has been run to the benefit of people OTHER than state employees. It’s you time,” Folwell responded, 30 minutes later.
“I appreciate your response, but if the doctors and hospitals do not sign on, what plans are in place to support state employees in getting the affordable care they need and deserve?” Zwally shot back.
“27,000 providers have signed. Working on hospitals. Plan C is for the state health plan to be the ATM that it has been. It’s one reason your family premium is what it is, which is unacceptable. You don’t have to answer this. What or who prompted you to write? Thanks for being a public servant,” Folwell replied.
No one prompted her to write, Zwally said.
“We understand that the medical system does need changing,” said Zwally. “I just want to maintain affordable, quality coverage and that needs to be our focus—and that real negotiations need to take place versus a take-it-or-leave-it approach.”
Landers, who works a second job as does his wife, also a teacher, says if January 1, 2020 comes to pass without large hospital networks signing on to the State Health Plan, he’ll have to look at scaling back his maintenance care for his Type 1 diabetes. “I’d have to make cuts somewhere to make our family whole and our lives to function,” said Landers.
“You can’t take the leverage of a 700,000+ state employees and turn that leverage into a gamble,” said Landers.