Treasurer Folwell Directs Blue Cross NC to Cut Provider Rates on Contracts Negotiated This Year by at Least 15 percent Savings Would Help Cut Family Premiums and Pay for Retiree Health Care

(Raleigh, N.C.) – State Treasurer Dale R. Folwell, CPA and the State Health Plan (Plan) announced today that Blue Cross and Blue Shield of North Carolina (Blue Cross NC) has been directed to cut the Plan's medical provider rates on major contracts being negotiated this year by at least 15 percent. Blue Cross NC is the Plan's Third Party Administrator which processes claims, provides a network of providers, and establishes medical provider rates for the Plan. All approved claims are paid using taxpayer funds.

Blue Cross NC negotiates rates with health care providers to establish the cost of medical services from health care systems across the state. Potential savings for the plan could be close to $1 billion over the next three years.

In 2017, the plan spent $2.5 billion providing medical services to more than 550,000 teachers, state employees, non-Medicare retirees, and their dependents. The 15 percent reduction is expected to generate approximately $300 million a year in savings for North Carolina taxpayers. Treasurer Folwell indicated that those savings will be used to lower family premiums and address the state's $34 billion long-term health care liabilities for retirees.

“We're going to be asking a little from a lot of people, and a lot from a few," said Folwell. “Many believe that medical providers can achieve at least 10 percent in savings. I believe it's more. I'm asking medical providers in the state to help us sustain this Plan for the future. We're in a medical arms race that is driving up costs, and we need partners to work with us to reduce costs for all."

Folwell added that he wanted to use the Plan's “largeness" to help drive down medical costs, noting that the State Health Plan is North Carolina's largest purchaser of medical and pharmaceutical services.

“I believe we can make a generational difference by allowing those who teach our children, protect us from crime, and pave our roads to have more affordable health care for their families. At the same time, we can pay down our long-term health care liabilities so that we can keep the promises made to hard-working public employees."

The announcement is part of a broader strategy to reduce health care costs for the Plan. Treasurer Folwell has launched a number of initiatives designed to increase transparency in the cost of medical services as part of a larger effort to turn members into watchdogs who, as better educated health care consumers, can help make the Plan more sustainable. 

The State Health Plan, a division of the N.C. Department of State Treasurer, provides health care coverage to more than 720,000 teachers, state employees, current and former lawmakers, state university and community college personnel and their dependents, including non-Medicare and Medicare retirees.