(Raleigh, N.C.) – State Treasurer Dale R. Folwell, CPA, today called for the United States Department of Justice to take action and for all North Carolina hospitals to be transparent in their pricing. The announcement was made in light of the recent settlement of a lawsuit filed by the United States Department of Justice and the North Carolina Department of Justice against Atrium Health, formerly known as Carolinas Healthcare System.
The civil antitrust lawsuit challenged provisions in Atrium's contracts with major health insurers including Blue Cross and Blue Shield of North Carolina (Blue Cross NC) that prohibited what otherwise would have been used to direct consumers towards high quality, cost-effective health care providers.
“For decades, the largest public hospital system in North Carolina has been engaging in this and other anti-competitive activities," said Treasurer Folwell. “In the spirit of this settlement, I'm calling on all North Carolina hospitals to be transparent and to publish their pricing so consumers can make informed decisions regarding health care. I'm also calling for the United States Department of Justice and the North Carolina Department of Justice, on behalf of the State Health Plan, to recover the potentially hundreds of millions overcharged to consumers by hospital management from this illegal activity."
Earlier this year, the State Health Plan (Plan) submitted a public records request to UNC Health Care for a copy of its contract and fee schedule with Blue Cross NC. Blue Cross NC is the third party administrator for the Plan and negotiates pricing for the Plan's 727,000 members.
In response, UNC Health Care provided more than 100 pages of redacted information with no visible prices. The state-owned hospital said that pricing information between Blue Cross NC and itself is confidential. Treasurer Folwell responded with a press release highlighting its absurdity.
“The taxpayers need to understand that the state treasurer cannot find out from the state hospital what the State Health Plan is paying for medical services for state workers," said Folwell. “It's beyond belief."
In order to begin reducing medical costs and to provide price transparency for its members, the Plan announced a new medical provider reimbursement strategy using referenced-based pricing based on a percentage over published government rates plus, on average, a 77 percent profit. The hospital association has vehemently opposed transparency in pricing and is intending to go to the North Carolina General Assembly to immediately stop the Plan's initiative to bring transparency and reduce costs. This opposition comes despite the state auditor's finding of seven years ago that the state is at risk for potentially overpaying medical claims.
If the hospital association is successful in stopping the Plan, then premiums, copays, and deductibles for the nearly 727,000 teachers, public safety workers, and other state and local employees are likely to increase. In addition, the projected $300 million in savings to taxpayers and $65 million in savings to members will never be realized. This could have a devastating effect on the long-term viability of the Plan.
“In North Carolina, we already spend $3.4 billion a year in taxpayers' money for state employees and retiree health care. Additionally, we owe $30 billion for long-term health care costs and we don't even know what we're supposed to pay for medical services," said Folwell. “If something isn't done now, then other core functions of government like education, public safety, and roads will be financially impacted."
Folwell also said that after his legal team reviews the settlement, he will be submitting comments on the proposed settlement to the United States Department of Justice.
“We're doing what's necessary at this point in our state's history because others didn't," said Folwell. “As chaotic as health care is, we have not lost our commitment on focusing all of our attention on the member and taxpayers like them. It's not enough to just point out problems, ultimately they have to be fixed."