- October 18, 2018
- Posted by: JPFarley
- Category: From The Desk of Jim Farley, Healthcare Costs
When N.C. State Treasurer Dale Folwell filed a request to see UNC Health Care’s provider contracts with Blue Cross and Blue Shield, he was sent hundreds of pages worth of contracts — nearly all of which were blacked out.
“This is what UNC Health Care sent me — the price list, all completely redacted,” Folwell said in a visit to The Courier-Tribune last week, flipping through the stack of “contracts.” Little to no text could be seen among the black blocks that took up entire pages.
According to a press release, for decades, the State Health Plan — which provides health care coverage to more than 727,000 teachers, current and former lawmakers, state university and community college personnel, retirees and their dependents — has used Blue Cross and Blue Shield of North Carolina’s commercial network of providers.
Blue Cross N.C. and medical providers have claimed what they charge is confidential. As a result, fees for medical services are not provided to the Plan or its members, despite state and federal guidelines that demand transparency.
That means that a surgery with a price tag of $30,000 could unknowingly only be costing the hospital $5,000 from the moment that a patient is admitted until the moment the patient is released.
It also means that — just like State Health Plan members — Folwell isn’t privy to these numbers, as evident by the completely redacted contracts he received upon request of the numbers.
As a result, he — the State Treasurer — has no idea what he should be reimbursing providers.
“I send $300 million a year to this one group,” Folwell said. “So, if they won’t tell me what I’m really supposed to pay, how am I supposed to figure it out?”
The new strategy
At the start of October, Folwell announced that the State Health Plan is launching a new medical reimbursement strategy for North Carolina providers that care for Plan members.
Come Jan. 1, 2020, the State Health Plan will move away from a commercial-based payment model to a reference-based pricing model. The new model will be based on a percentage of Medicare rates to reimburse health care providers for their services.
Read Full Article: The Courier-Tribune
The fact that North Carolina Blue Cross is offering a plan to under 50 life groups and individual policies that will reimburse claims at 140% of Medicare. These plans will cost about 35% of the cost of a network plan and, with the implied approval of Blue Cross and thousands of dollars of savings, will likely be a pretty hot seller.
On top of that, the Blue Cross administered 700,000-member State Teachers and Employees Plan will begin paying on a percentage of Medicare basis (at about 180%) on 1-1-20.
This is a big game changer for everyone in North Carolina involved in medical care.
I kept thinking about why and a thought hit me. Thinking about Amazon and other large employers who are considering the Raleigh-Durham area for their headquarters or expansions. Imagine the extra incentive such savings would serve before any state tax or economic development subsidies. How quickly will this force other states to adopt the same approach?