On Tuesday, the North Carolina State Health Plan Board of Trustees voted unanimously at its meeting to approve the implementation of a three-tier provider network for 2027 that aims to strengthen the Preferred Provider Program (PPP). The network will steer members toward providers, purportedly at a cost savings for both the member and the State Health Plan (SHP), while delivering a volume of patients to preferred providers.
The final dollar amounts (copays) associated with the tiers will be voted on at the June 5 meeting.
The plan’s projected deficit was $507 million in 2026 and $1.3 billion in 2027, but changes implemented by the SHP board and the General Assembly reversed this trend and brought the plan about $30 million above its reserve rate by the end of 2025.
“As we look ahead to 2027 and beyond, our work is far from finished,” Briner told board members. “We’re building from a far stronger foundation.”
He said the three-tier provider network will reward high-value care providers who partner with them to reduce the total cost of care, support extended access (especially in rural and underserved communities), and encourage members to make more cost-effective choices, while preserving the plan for the long term.
“We are all in this together,” said Thomas Friedman, executive administrator of the SHP. “We are not going to be successful at getting healthier and reducing costs if it is us versus them… There’s going to be losers in this transaction, but it’s not going to be the member. It’s not going to be the State Health Plan.”
Referring to health care systems that don’t want to participate in the preferred provider program, he added, “The cartel language is over.”
He said they could charge more and make benefits worse, or get doctors to lower prices, and noted that providers that charge more cannot be allowed to have the same access to members as those who are cutting prices for members.
Friedman stressed that they have built an extremely large primary care network in the PPP, are continuing to build their surgery network, and will also focus on building maternity and dermatology networks, as well as partnering with independent pharmacies.
He pointed to the success of the Lantern surgical benefit, which the plan launched last fall. It provides eligible members with no out-of-pocket costs for certain, non-emergent surgeries when performed by participating Lantern providers.
As of March 6, 406 procedures have been completed, with 1,848 open cases on the schedule.
“People will compete for your business on price, we have excellent evidence of that now,” Friedman said.
He gave an example of a $30,000 surgery costing $0 for the member at a preferred Lantern surgical provider, and $15,000 for the SHP, versus $5,000 for the member and $25,000 for the SHP.
Financial projections versus budget were also discussed.
Friedman said that Medicare retirees will be defaulted into the Medicare Advantage Plan during this year’s open enrollment and that the decision won’t be revisited for a long time.
Dr. Emma Turner, chief economist for the SHP, noted that there could be a significant risk of much higher rates for Medicare Advantage plans for 2027 based on an initial proposal, but they would know more at the next board meeting.
The board also voted unanimously on the Out-of-Pocket Maximum structure.
In addition to voting on co-pays in June, the board will also take a look at strategic planning at that time with three goals:
- Protect affordable premiums and stable benefits
- Help members achieve better health — over 70% of members have a chronic health condition.
- Ensure members have access to care.
Friedman also said that they would have recommendations for the plan’s pharmacy benefit manager (PBM) and third-party administrator (TPA) in July.
The SHP awarded Aetna as the third-party administrator two years ago.
The new contract would start on Jan. 1, 2028.
Aetna replaced Blue Cross and Blue Shield of North Carolina in January 2025, after it served as the TPA for more than 40 years.
The change occurred in 2023 under former State Treasurer Dale Folwell.
“This administration has different priorities and would prefer a contract that is more in line with those priorities,” said Loretta Boniti, director of communications and media relations for Briner, in an email. “The Plan is seeking partners who support the alignment of incentives between members, providers, and the Plan. Future partners will assist us with improving health, delivering an excellent member and provider experience, while fostering financial sustainability.”
The State Health Plan issued the RFP for Pharmacy Benefit Services last month and is currently in the silent period. This contract would be effective Jan. 1, 2028. The CVS concerns have been resolved.
Friedman stressed that no bids were going out early in the process.