News: CJ Exclusives

Folwell offers better deal — and new deadline — for hospitals to join State Health Plan project

State Treasurer Dale Folwell. (CJ file photo)
State Treasurer Dale Folwell. (CJ file photo)

State Treasurer Dale Fowell has sweetened a deal for hospitals to sign on to his Clear Pricing Project.

While hospitals refuse to sign onto the new system, promoting transparency in pricing, state employees fear losing coverage in major hospitals, where they would be treated but have to pay out-of-network charges. 

Without serious reforms, the State Health Plan is set to go broke in the next four years. The Clear Pricing Project is the state treasurer’s attempt to save it by tethering payments to Medicare rates. 

“If we don’t make a change now, we’re staring down the barrel of a 266% increase in premiums for state employees in just four years — that’s $133 a month for health insurance in a robust economy,” State Employees Association of N.C. Executive Director Robert Broome said. “And 10 years ago, there was no premium.”

Taxpayers spend more than $3.4 billion each year on state employee health care. Fowell originally promised to save taxpayers $166 million, and plan members another $34 million in reduced costs. In his latest attempt to lure hospitals to the table, Folwell increased the rates hospitals would get from 182% to 196% of Medicare’s payments.

“We have a loyalty to our members and the 27,000 providers who have already signed up to see it through, to have a network that won’t have secret contracts and higher costs,” Folwell said. 

Before the Clear Pricing Project, Fowell described the State Health Plan as a blank check to hospitals and providers. The treasurer said the state “didn’t have a clue” what it was paying or “what the hell we were spending this money on.”

Both Folwell and the State Employees Association of N.C. describe the higher reimbursement rates as generous. Folwell’s calling the increase a “final offer.”

In an earlier internal email, CONE Health CEO Terry Akin said the Clear Pricing Project would pay hospitals 35 percent less than they’re getting now, costing CONE $26 million. Hospitals point to those numbers and warn the loss would cut into charity care and damage their fiscal health. The treasurer takes that report as evidence hospitals have been milking the system’s blank check for all it’s worth.

The hospitals have between Friday and midnight Aug. 5 to sign onto the plan, or they will become out-of-network providers, forcing state employees to pay much more out-of-pocket for all their health services from those providers.

“We’re doing what’s right,” said Folwell in a news release. “Someone has to expose the secret contracts and dark money that has caused health care costs to skyrocket in this state and across the country. We’re doing this so that our members will have an affordable and accessible health care benefit in the future. I urge medical providers to accept this very generous offer. The options – both short and long term – are not good. We need to act now.”

SEANC has been pushing this reform for the past decade. Now that they have found a treasurer willing to take on the giants of the health-care industry, the fighting has gotten ugly. 

Matters have escalated into personal attacks, and UNC Health Care has already engaged in what’s been described as a dark money scandal.

“Burn in hell, you sons of b*****s,” Cone Health’s Assistant Director of Finance, Frank Kauder, advised in an email to the State Health Plan’s Board of Treasurers. Other gems of rhetoric included his nickname for Republicans — “Retardicans” — and a rant against “the most moronic idea I have ever seen come out of our state government.”

Cone released a statement declaring the email to be a personal opinion, and endorsing respectful dialogue. But that was hardly the first sally in a fight that has rapidly become personal.

Earlier this year, UNC Hospitals gave almost $60,000 to Partners for Innovation in Healthcare, which attacked the Clear Pricing Project. The group is a 501(c)4 group affiliated with the hospitals’ lobbying group, the N.C. Healthcare Association.

When questioned, a UNC spokesperson claimed it was a mistake, but was unable to explain why the signature of Chris Ellington, executive vice president and chief executive officer of UNC Hospitals and president of UNC Health Care Network hospitals, authorized the payment.

SEANC is hitting back with its own brand of vitriol: a new site dedicated to “Million Dollar Mike,” the CEO of Vidant Health. It details the $800 million “cash stash” of Vidant’s unrestricted reserves, and CEO Dr. Michael Waldrum’s $1.2 million annual salary. Next to an unflattering picture of Waldrum is a snapshot of frowning children, presumably meant to represent some 720,000 state employees whose coverage is imperiled.

“They need to sign on behalf of state workers, and on the behalf of taxpayers,” Broome said. “There’s a big difference between losing money on the state health plan and not making as much profit as you want. The figure they say they are losing by not being able to overcharge state employees for their healthcare is a mere fraction of their total profit.”