RALEIGH -- State Treasurer Dale R. Folwell, CPA announced that the State Health Plan will launch a new medical reimbursement strategy for North Carolina providers that care for Plan members. This effort is part of a longer term strategy to take advantage of the Plan’s “largeness” to keep rising health care costs under control while promoting quality care, transparency and affordability.

For decades, the Plan has used Blue Cross and Blue Shield of North Carolina’s (Blue Cross NC) commercial network of providers. Blue Cross NC and medical providers consider fee schedules (what they charge) associated with this network to be “confidential.”  Subsequently, the fees charged for medical services are not provided to the Plan or its members despite the fact that there are state and federal guidelines that demand transparency.

Starting on January 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. The Plan is a government payer like Medicare. Medicare is the largest health care payer in the country and the Plan is one of the largest in the state. Medicare also provides a standard reimbursement measurement that is transparent 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.

“We’re going to be asking a little from a lot of people, and a lot from a few. I’m asking health care providers in the state to help us sustain this benefit for teachers, public safety officers and other public servants,” Folwell said. “For years, the Plan has paid medical claims after the fact without knowing the contracted fee. It is unacceptable, unsustainable and indefensible. We aim to change that. This new pricing model will help us ensure the delivery of quality care to our members and better control health care costs, preserve the sustainability of the Plan, and promote transparency for Plan members and state taxpayers like them.”

The Plan’s overall goal is to offer quality health care to its members and to generate savings of $300 million, making it possible for the Plan to reduce premiums and make the Plan more affordable for state employees and their dependents. This will result in savings for Plan members of over $60 million. The Plan, with an annual budget of $3.3 billion, looks forward to working with health care providers on this strategy that creates a system that is more transparent and predictable than 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.

“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.”