Go out of network with your health-care providers, or join your spouse’s or partner’s health insurance?
That could be an expensive choice – potentially as soon as Jan. 1 – for more than 727,000 of North Carolina’s state government employees and their dependents, as well as state government retirees who haven’t qualified for Medicare and their dependents.
The State Health Plan, or SHP, is the largest buyer of medical and pharmaceutical services in North Carolina, spending $3.2 billion in 2017.
In October 2018, N.C. Treasurer Dale Folwell began his attempt to move SHP to a government pricing model tied to Medicare reimbursement rates, which typically are lower than what hospitals currently receive for services.
Folwell’s proposal would allow SHP to begin paying about 61,000 providers based on a percentage above current Medicare rates, along with an additional and adjustable profit margin estimated at 82%.
Hospitals and providers were given a July 1 deadline to sign the Clear Pricing Projectcontract or be considered as out of network to SHP on Jan. 1, 2020. Folwell said Wednesday that 27,000 medical providers have signed the contract.
However, just three of the state’s 126 hospitals have done so. Cone Health of Greensboro said on July 1 that it would not sign the contract, saying it would cost the health-care system at least $26 million.
Frank Lester, a spokesman for the treasurer’s office, said it does not have track how many SHP participants have spouses on their insurance plan.
When asked about in-network options for SHP participants to go to Cone physicians and providers, Cone Health said it “encourages them to take advantage of other insurance options during the fall benefits enrollment period.”
“We are urging state employees to look at their spouse or partner’s plan come open enrollment,” Cone Health said.
Employers and health insurers negotiate rates that provide in-network discounts to individuals covered by an employer-based plan. An insurer can have different in-network groups, depending on the plans chosen by the employer.
Without the negotiated discount, out-of-network costs can be significantly higher for most medical procedures.
The Kaiser Family Foundation reported in a 2018 study that a small, but increasing, number of small and large employers are requiring employees to pay on average a $100 monthly surcharge for their spouse to stay on their insurance if the spouse’s employer offers coverage.
Other employers are lowering the value of the benefit coverage for a spouse or partner rather than apply a surcharge.
“Switching to spousal coverage is an option for any employed couple, but increasingly, private employers are requiring workers to pay more or all of the cost of adding family members,” said Mark Hall, a law and public-health professor at Wake Forest Universityin Winston-Salem.
“Therefore, this switch will often cost the couple more money” compared with each spouse or partner having separate coverage on their employer’s plan, Hall said.
Limbo could last for months
Among the state’s health-care systems, UNC Health Care appears to be the most active with its opposition to the contract.
That includes submitting a counterproposal to the contract to Democratic Gov. Roy Cooper and Republican legislative leaders.
The pressure to sign the contract or go out of network will increase – as likely will the rhetoric on both sides – as the early fall timeline approaches for SHP participants to choose which providers they want for 2020 coverage.
If the typical contract negotiations between private health insurers and hospitals are any indication, the out-of-network limbo could linger for months before an agreement is reached.
“More employers are thinking of ways to incentivize getting spouses off their employees’ health-insurance plan,” said Matthew Rae, the associate director of the Kaiser Family Foundation’s program on the Health Care Marketplace.
“It’s been a slow build among employers to control their health-insurance costs, since spousal health-insurance coverage tends to be more expensive to provide benefits than employees on their own,” Rae said.
He said that for some people, being out of network could be more expensive; for others, the monthly premium surcharge could make coverage cost-prohibitive.
“The spousal insurance coverage, obviously, isn’t an option for millions of single Americans,” Rae said.
“If an individual has insurance coverage through their employer and chose not to access it because of providers being out of network, they likely can’t go to the federal health-insurance exchange because they have an employer insurance option,” he said.
Cost control
A 2017 study by human-resources consultant Mercer found that just 10% of large employers do not provide coverage for spouses who have other coverage available.
Mercer found that the use of spousal surcharges rose from 12% in 2015 to 14% in 2017 for all large employers.
Health insurer Anthem said its 2018 International Foundation of Employee Benefitssurvey found that 20% of employers now either charge employees more to add a spouse to their health plan or exclude spouses entirely. That’s up from 16% in 2016.
“Some only charge or exclude spouses who have coverage available elsewhere, while others have blanket policies for all spouses,” Anthem determined.
“If you’re eyeing your health-care expenses and considering a new strategy for spouses, introducing a spousal surcharge could offer a workable compromise, allowing employees to share coverage with their partners without blowing a hole in your company’s budget,” Anthem said.
The insurer said spousal and partner surcharges tend to be used by employers to offset rising health-care costs.
“They still want to offer good medical coverage, but the expense pushes them to decrease the number of spouses signing up for coverage if they have other viable options,” Anthem said. “Sometimes, the charges are necessary in order to keep premium increases as low as possible.
“Some employers have responded by barring spouses from joining employee health plans, but doing so can come at its own cost, potentially alienating married members of your workforce,” it said.
The Kaiser foundation said that in 2018, 99% of large companies (more than 200 employees) and 97% of small companies (199 of fewer employees) offer health-insurance coverage to spouses.
By comparison, 45% of small companies and 47% of large companies offer coverage to opposite-sex and same-sex partners.
When it comes to large companies, just 32% offered coverage to opposite-sex and same-sex partners in 2008.
About 13% of companies said they would provide additional compensation or benefits to employees who enroll in a spouse’s health-insurance plan, while 16% provided additional compensation or benefits to employees if they did not sign up for employee health coverage.
About 2% of companies have reduced their contribution to spousal benefits.
Who has signed contract?
The state treasurer has the authority to decide on SHP reimbursement cuts.
House Bill 184, which would block Folwell’s initiative for at least a year in favor of a legislative study report, cleared the N.C. House by a 75-36 vote April 3. It has yet to be acted upon in the N.C. Senate since being sent to the Rules and Operations CommitteeApril 4. Senate leader Phil Berger, R-Rockingham, has signaled he has no desire to take up HB184.
Cone Health 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.”
“Cone Health has no choice but to decline joining,” it said.
Cone Health also said that “if we accept this contract, other payers may push for similar terms.”
Wake Forest Baptist Medical Center said on July 1 that it would not comment on its contract stance.
Novant Health Inc.’s latest comment on July 1 included that “it is our understanding that State Health Plan members will have an opportunity to verify provider’s network status after July 1, and before their open enrollment (for 2020) begins on Sept. 29.”
The three hospitals to sign the contract are N.C. Specialty Hospital in Durham, Martin General Hospital in Williamston and Randolph Health in Asheboro. The contract is administered by Blue Cross and Blue Shield of North Carolina.
Folwell said Randolph Health’s decision to sign the contract was done in part to provide a more dependable revenue stream for a hospital that is pursuing an acquirer. Randolph negotiated with Cone for 15 months before talks ended in June 2018.
Dr. Wesley Burks, the chief executive of UNC Health Care and dean of its medical school, told SHP leadership on June 27 that the system “is not in a position” to sign the current contract.
“While we crafted our plan independently, we believe it achieves many of the principles Treasurer Folwell outlines,” Burks said. “We do not speak for other hospitals and providers in the community; however, as actively working in other segments, we believe these ideas will be broadly welcomed.”
“Over the next few weeks,” UNC Health Care said, “we are optimistic we will be able to discuss these alternatives in detail with the leadership of the SHP.
“We are confident we will be able to reach agreement in ample time to avoid any impact upon the provision of, or access to, care for state employees, retirees, and their dependents.”
Reactions
Folwell called the UNC Health Care counterproposal “a silly back-to-the-future strategy that was presented to the previous treasurer and State Health Plan administration over three years ago and was rejected because of its lack of transparency and no concrete, measurable savings to the plan.”
Berger said hospitals and providers “will only be out of contract if they fail to come to an agreement with the State Health Plan and the treasurer.”
“The State Health Plan has reimbursement contracts with providers that run until the end of 2019, so I am still hopeful they can come to a solution that does not result in state employees seeing a reduction in available providers,” he said.
Cooper’s office said on July 1 it was reviewing the UNC Health Care proposal, noting, “The office believes the state should halt the treasurer’s plan until hospitals across the state can collaborate and provide input to assure patients will get the care they need.”
Folwell said in response to the governor’s office that Cooper “has always been aligned with the billionaire nonprofits and against those who teach, protect, and serve.”
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