Latest / The SEANC View / State Health Plan Shakeup: Premium Increase, Provider Tiers, and Blue Cross’s Return

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State Health Plan Shakeup: Premium Increase, Provider Tiers, and Blue Cross’s Return · The SEANC View

0:11
Hello, and welcome to another edition of the Scenic View podcast.
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I'm your host, Jonathan Owens, along with Suzanne Beasley and Artis Watkins,
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our executive director.
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Today, we have a full studio in here because it's a very important episode.
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It's a recap of the State Health Plan Board of Trustees meeting with State Treasurer
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Brad Briner and Plan Executive Administrator Thomas Friedman. Welcome, you folks.
0:39
Hello. Pleasure to be here. You are the two men at the center of some of the
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most significant changes in health benefits for state employees recently.
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On Friday, the board voted to raise premiums for most of the plan's 750,000 members,
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approved a sweeping overhaul of how the plan pays for care through provider
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network tiers, and voted to return to Blue Cross Blue Shield of North Carolina
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as the third-party administrator in 2028.
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And the pharmacy benefit manager. And the pharmacy benefit manager. And we'll get into that.
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These decisions will affect every state employee, teacher, retiree,
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and their family, about 10% of the state's insured population.
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So before we jump into the plan, Treasurer Browner, what are your thoughts, I guess, first? Sure.
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You know, this journey began with a healthcare system that is troublesome for everybody involved.
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And we all know that. We all live that. It doesn't matter if you're on the state
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health plan or not. Everyone's got the same experience. Prices keep going up
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faster than you have money to pay for it. And there's a lot of reasons for that.
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As an aside, the governor asked me to co-chair state health care affordability task force.
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And I'm doing that with Secretary Sangvai to try to figure out if there are
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ways we can help solve the broader system's problems.
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That's a much harder challenge than solving the state health plan's problems.
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Today, we're going to talk about the state health plan. We've got real challenges
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as a country, as a state, and our healthcare system.
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We can't solve those by ourselves, but we can solve a lot with a state health
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plan. And that's what the board meeting was about on Friday.
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We can take control of our state health plan in ways we haven't before,
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use kind of basic market principles and certainly the scale of the plan to drive
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a better bargain for everyone involved in the plan.
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And then we can reward our members for helping us do that.
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So that's the basic architecture that we want to do. It involves change.
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We understand that change is hard in every walk of life, but in healthcare particularly.
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We got a lot of people who are in the middle of a challenging care journey,
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and we don't want to make them change. So there are a lot of things that we're
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going to do to protect people who shouldn't have to bear the brunt of change.
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That said, we are going to ask people and we're going to reward people to change
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providers in certain instances. We'll talk about the different tiers and we'll
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talk about what we're doing there.
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But it revolves around a basic concept. There are providers who really want
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to work with state employees.
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And they value who they are and they value how many of them there are.
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They are high-quality providers. They will enter into direct contracts with us at lower rates.
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What we need to have is our members to go there. That's the essence of the bargain.
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There's a lot of detail behind that, but remember over and over again,
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that's what we're trying to do. Why do the providers want to do that?
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Because they can get more volume and so in places in the state where there's
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one provider and they have all the volume they can't get more volume they're
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not likely to enter into a contract with us to lower rate because they can't make up for it with more.
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So wherever you are in the state if you don't have competing healthcare providers,
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most likely everything's going to be in the access tier which means prices don't
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go up they stay flat year over year,
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where you have a competitive healthcare system, and that's certainly the Triangle,
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the Triad, and certainly Charlotte.
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We can go to providers with this bargain.
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And many of them have stepped up and excited to talk about that.
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Well, without naming any names, there are systems right now that are seeking
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to limit competition, even in the areas where it currently exists. Yes.
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Are you worried that this unchecked consolidation, no matter who the players
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are, and they've been all over the board in terms of the players...
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Will simply leave you without an ability to exercise your largeness as a system,
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to extract that kind of competitive nature?
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It is a totally fair question, but there's so many other pieces to it that are
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to some degree in play. Certificate of need being one of them.
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Where you're starting to see around the edges, the certificate of need paradigm
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change in North Carolina.
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Two or three years ago, a couple things came out. This year,
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another element came out.
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And so you've started to empower health systems to actually compete with each
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other, which really helps get at the core of what you're asking about.
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To the extent we refuse to let them compete, then consolidation is an enormous
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problem for every payer, not just the state health plan, because we see how that always works out.
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So there's two sides to this, very much in favor of competition.
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I think it helps us all be more efficient. It is uncomfortable often,
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but it's what makes for better outcomes over time. And so to the extent we can
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get to a competitive market, that's going to be better for everyone, however we get there.
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And I do want to, I know you're here to talk about the state health plan specifically,
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but because you mentioned the Commission on Affordability, you know,
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we have feelings about that because we've watched different iterations of that
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over the past few governors.
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And every time we see the appointees, not of the voting members,
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but of those who are, I can't remember what they call the rest of the folks
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who are advisory members,
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the folks from whom you, like all the other committees before you,
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will be taking advice, are largely the ones who are part of entities that caused
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us to be number one in cost in the nation in the first place.
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So why would any person out there think that it's going to be different?
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It's a totally fair question. And we will have our inaugural meeting here at the end of July.
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The temptation is going to be to address a handful of well-trod paths of how
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do we create marginally better outcomes in certain areas.
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I think that is valid territory. But more interesting to me is a reimagining
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of the health care system.
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That would actually work. There's probably two real visions for that globally.
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And so we've actually asked the folks who are doing some of the underlying consulting
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work to start those work streams as well.
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I actually have in my office a Commission on Affordability from 1977 study.
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Oh, my goodness. And 80% of it could be written today. Right.
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So these challenges are not new. You're right. Many commissions have tried.
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I hope that by having more ambition than others in terms of looking at the broader
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system, we might be able to at least present a vision of how things can work.
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Getting from here to there, huge challenge.
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But at least knowing where you're
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headed, you can start doing things that get you closer to it. Got it.
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So our members have a lot of questions. We did post on our Facebook page a few times over the weekend.
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And if you guys didn't know it, we have the most active Facebook page in all
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of state politics. That's just me making that proclamation. I was like,
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based on what? The metrics of what? No, I'm standing by that one.
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When you do that, people think.
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To quote George Costanza, it's not a lie if you believe it. That's right.
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And I challenge any organization to top us because any time we post.
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They can top us. They just say, just talk to you. Or just show us the metrics.
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But no, we did post several times over the weekend about the changes to the
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plan, and we got more than 500 comments and lots of questions.
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And so we're going to kind of base this whole interview over what we saw on the Facebook page.
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But before we dive into them, I kind of want to veer off course a little bit.
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And this is something that came up a lot over the weekend on the Facebook, so I'm not...
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Ignoring those questions, but it seemed with our members, the tier system seemed
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to be the most confusing part for them.
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And I know, Thomas, you released a video yesterday that was kind of clearing
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up some of those, and I thought it was very well put together. So.
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I thought it had a great explanation of the whole thing. So I wanted to kind
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of start with that. UNC Health, Novant, and Iredell are, I always say Iredell
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wrong, right? She gets on to me every time. Depends where in North Carolina you're from.
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Yeah, true. Yeah, I'm from like Moore County, so we say everything kind of weird.
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But Iredale, Novant, and UNC Health are preferred providers,
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whereas Atrium and some Duke specialized.
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Duke LifePoint, very different. Duke LifePoint, okay, are non-preferred.
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And members are asking about Cone Health, Caramont, ECU Health,
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what do I do down east, things like that.
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So can you just kind of start with explaining the networks and how all of those are still in network?
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Sure. Yeah, I think that's a really good question. And I think the most important
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starting point for me is most health care providers in North Carolina are in the access tier.
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So there's three tiers. There's preferred, access, non-preferred.
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Access is most providers in North Carolina, right? So I think you did a good
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job of summarizing the preferred health system and some of the non-preferred.
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That means everyone else is accessed, and I'll qualify that in a second.
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But so most providers are accessed, and that is the benefit you have today with
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one kind of big exception, is we've reduced the copay to use specialists.
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Want to make sure there's access to those things.
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Heard loud and clear the specialist copay is too high now.
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And so we are using some of the savings for the preferred provider structure
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to pay for copay reductions in the access tier.
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Something also really important. So we've had a lot of preferred providers for a long time.
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We are just enhancing that benefit across the board. So yes,
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from a health systems point of view,
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UNC Health, Novant Health, Ardo Health,
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but also we have 4,500 primary care providers in that tier, six multidisciplinary
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specialty practices, Wilmington Health, Tryon Health, Eagle Physicians,
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Piedmont Health, and then ambulatory surgery centers and other surgical places.
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Like Emerge Ortho, Ortho Carolina, Pinehurst Surgical.
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So while we have added health systems, what we have done is effectively added
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to a structure and made the benefits more attractive across the board in that
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structure. So right now, if you want to Emerge Ortho, your specialty copay is the preferred tier.
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Next year, any service you get there is at the preferred tier.
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Any service at Tryon Physicians in the Charlotte area.
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So they have orthopedists, they have specialists, any service you have there
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is in the preferred tier.
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So I think the health systems rightfully got a lot of attention because that's
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where the spend is in healthcare.
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But most providers, 85%, 90% of providers in North Carolina,
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just based on numbers, are in that access tier.
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So no one has gone out of network. We are still determining who is that access
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provider in the triangle.
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We had thought it originally was going to be WakeMed.
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There have been recent developments that people want state employees' business
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more and more and are willing to cut rates to stay in at that access tier to get things.
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And I think, you know, to where the treasurer started, this is about competing
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for your business and giving state employees better prices for things.
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Listening to you about the different networks, it's almost kind of like you're
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bringing the lantern program to the whole plan. Is that a very smart framework
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to think about it, right? It is.
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You know, for a long time, I think we have all agreed healthcare is too expensive
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and healthcare prices are opaque and we get charged too much to pay for things.
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One of the beauties of Lantern was we negotiate through scale to get lower cost.
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The member has to save first. There has to be high quality providers.
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And, you know, we're kind of doing that on steroids a little bit.
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You know, I think about if you're going to use a preferred provider,
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whether it be a primary care provider or a health system, those are folks that
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have agreed contractually to provide better value for our members and their care.
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So you could pay $250 for a service somewhere, or you could pay $150 for the preferred provider.
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The more people that choose that $150 path, the lower premium costs are going forward.
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And again, the member's got to save first, or this is a meaningless exercise.
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And I think bringing in two large health systems that cover,
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you know, go from Avery County to Brunswick County gives the most members the most opportunity,
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to work with the health systems that really want to work with them and provide
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that value and discount to our members.
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Can you explain a little bit about how those systems were chosen for the different tiers?
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Or were they chosen or did they just sign on? Yeah, no, I think it's a good question.
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I think starting in the fall, we had some communications with the health systems
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in partnership with the Healthcare Association when we started the Lantern program
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and kind of first articulating the treasurer's vision of healthcare is too expensive
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and you need to compete for our business.
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State employees are valuable. You need to compete for our business.
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We said kind of then and there, folks that want to go on the surgical journey
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with us are the first folks we're going to talk to from a partnership point
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of view for the rest of us. Because it is confusing. It's like,
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go here for this, but go there for that. Like, people have so much bandwidth.
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But you had to start somewhere. You had to start, right?
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Then we, Treasurer and I, and then me kind of separately met with the heads
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of every health system and be like, y'all, we're not kidding.
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Like, the prices have to come down. Did they say that's cute?
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One of them who wasn't picked, I think, thought it was a little cuter than everyone
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else did. And I think you can guess who they are and where they sit today.
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But, you know, you did ask some of these folks just, you need to compete for our business.
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And the reaction to that in certain cases was, don't you understand we're not
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in the competition business?
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A hundred percent. That's how they feel. They're very open about it.
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Their lobbyists are very open about it in the building.
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Well, and then so, you know, you have those conversations and kind of go back
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to someone who said, I'm not going to beg you to give us a good deal and work with us.
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But UNC and Novant saw the vision right away and said, we do want more state
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employees. We want more teachers on the plan.
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Let's figure out a discount that works well for both sides so we can do richer
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benefits for members and lower the prices across the board. And they've done
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some pretty substantial price lowering across the board.
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And that's reflected in the benefit differential, right? Like we have,
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if we're making the benefit half as expensive as the access tier,
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that is who's paying for that. UNC is paying for that. Novant is paying for that.
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Merge Ortho is paying for that on behalf of members. And then I think the beauty
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and the elegance of it is the member saves at the point of care.
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And then we, on the back end, spend less money so that the rest of the members,
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you know, I'm assuming we're going to talk about premiums at a point in time here.
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That our cost goes up less and there's more money to keep premiums low,
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more money for salary increases, more money for colas, because we don't need
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as much money going forward.
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Because it is one pool of money. And so my job is to make that the need from
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the helpline on behalf of the taxpayer, the members, and everyone as low as
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they possibly can while maintaining that high level and high quality of care.
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And Novant UNC got it and they stepped up. And, you know, later this week,
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someone else is going to have stepped up and really been interested in helping us reduce our costs.
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That back end part of the plan is a link that I think that our folks don't understand,
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too, that the sustainability of the state health plan is, I mean,
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quite frankly, in jeopardy. So something has to change.
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So, yeah, I appreciate you just trying to clear that. You know,
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it's complicated and digesting it all at once is really, really hard.
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And that's why we need to do things like this. And, you know,
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credit to Bertie Bland, who's a scenic member out in the western part of the
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state. She's already reached out and said, hey, you got to come back out here and talk to all of us.
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Because we were out there in Morganton, I don't know, in the fall. Oh, okay.
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And she was like, hey, you got to come back out here and talk about this again.
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I was like, I'll be wherever y'all want me to be. I'm meeting with District
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61 and 62, first week of August. Down east, yeah. Down east,
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yeah. So I will be wherever y'all want me to be.
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One, it is, I fully know, this is complicated, but it is complicated,
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when, Because health care is complicated and this is the only way to make it
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more affordable for those who can use it and have money on the back end so we
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don't continually need to use more and more, need more and more resources that,
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resources from everything else.
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And I think some people listening will have no idea if they're newer employees.
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They have no idea the history of the health plan.
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I mean, when I started at Scenic in the Dark Ages, one of the first things I
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was reading about was that in the late 90s, after Hurricane Floyd came through,
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state health plan reserves were literally used. with Hurricane Floyd relief.
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That struck me as extraordinarily odd. But what really struck me as odd is that
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when the health plan would be used in these, you know, the retirement system,
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in 2001, the funds were escrowed by Governor Easley at the time.
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We had to sue to get those put back.
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Money would just get taken like it was going to get taken just for a minute,
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But it wouldn't make its way back to these systems.
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And so there was sort of this idea that the health plan, eh,
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You know, it's very ad hoc, obviously. We'll just throw whatever money we need at the time.
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And every time it ended up needing money, which, by the way,
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wasn't because the health plan members were somehow more chronically ill than
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the rest of the population.
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It was because of this mismanagement over the years. And I mean,
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this goes back. This well precedes even me working at Scenic.
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This is just a thing with the health plan.
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But it was subsidizing. And we were told this back in the day by legislators.
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This is how we keep costs down, and that's how we keep care in rural areas in
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parts, is by having the health plan overpay, so y'all are just going to have to chill.
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That was never going to sit right. That makes no sense. That's a terrible system
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if you're having to subsidize in that way.
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But what we've seen is state employees literally told to our face,
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you're subsidizing stuff.
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And now, when the legislature's having to put in more significant amounts of
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money, they're like, but look what we just did for you.
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Hello not sitting legislators right now but the legislative body created this
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for decades and now they want to put the onus it feels very much to state employees and retirees,
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like it's put on them and not on the plan so i get it that y'all can't.
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Do something that's super simple that would be easily understood because that
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would have to be something just super drastic like the Clear Pricing Project would have been.
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And that was clearly met with an absolute no way, bipartisan no way.
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And by the way, that never shocks me either because, you know,
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it's the most powerful lobby, honestly, in this state.
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And pretty much nationally, healthcare is the most powerful lobby because that's
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where all of our dollars are they can afford to lobby.
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So I think, Treasurer Briner, when you were about to assume office and we had
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a conversation, the first time I ever sat down and talked to you,
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I know that health care was at the top of your mind. Absolutely.
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And it seemed like without even having gotten into the health plan deeply yet,
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you were aware that, oh my goodness, this is a tough one.
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The retirement system was going to be no sweat to you because that's your world.
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But can you kind of tell us how you decided as you were assuming office,
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this is how I'm going to approach health care?
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And how is that borne out, you know, the second you're into it with Thomas at
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the helm and the vision that you had and I guess you two together have for the plan?
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So I think it was 10 years ago, the first time and Treasurer Falwell gets all the credit for this.
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The first time we actually understood the magnitude of the financial promises
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we made in the state health plan. They never measured them before.
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And it was $30-odd billion and it was $35 billion by the time I came into office.
20:28
And so that scale is just enormous.
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$507 million is a number we talked about a lot, and that was the projected deficit for 2026.
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That number's enormous in any one year.
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And so I think the first thing that as you go through these conversations and
20:44
getting up to speed, the enormity of these numbers mean that no one alone can
20:49
solve them, right? Everyone's going to have to join hands and figure out a way to solve them together.
20:55
Two, the system is set up for the payers to fail, right? And that's what you
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see over and over again. Every year, more of GDP in this country goes towards
21:04
healthcare, right? It's set up that way.
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And so we're fighting a big number on the one hand and a system that's somewhat
21:11
broken on the other hand.
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And given those things, there's only so many strategies that could even possibly work.
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And one of them is the one we're pursuing. And that is to bring the resources
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we actually have in control, the scale of our members, the engagement of our
21:27
members, the money we do have, the relative amount we pay to Medicaid, as an example,
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to bear on this problem that will age well.
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One of my favorite investment managers ever always would talk about when considering
21:41
a situation, is time your enemy or is time your friend?
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And you always want to be in a situation where time is your friend,
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where if things normally just play out, things get better.
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That's the architecture we want to put in place, where people compete for our
21:58
business, they learn that they need to compete for our business,
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and then they become more competitive next time.
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In so doing, they become more efficient so that they can lower their costs and
22:07
pass those discounts on to our members.
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So that's what we're trying to do is set up a system that ages well,
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that gets better over time, that aligns incentives for everybody.
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We want our providers to be successful.
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We need them to want to be in these types of arrangements.
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Now, successful within certain limits, right? Right. But we want and need them to make a profit.
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We don't need them to subsidize every little league team there is.
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The communities would have more money to do that themselves if your county government
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and your city government weren't
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having to spend a thousand times more on health care than they should.
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But we're with you. They are not in business to be charities.
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That's not the way it's set up.
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But for goodness sakes, it shouldn't be as profitable as Louis Vuitton or something.
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As a guy who studied a lot of the financials over the course of my life,
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studying hospital financials is just fascinating.
23:00
There are so many things that still don't make sense to me. The nonprofit distinction
23:06
in the healthcare world is like no other nonprofit distinction.
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I used to work for a large nonprofit foundation, in fact, and that meant that
23:15
we literally didn't make profits.
23:17
That is not what it means in health care. It means that they've struck a bargain
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with a state where they give more charity care and they pay less taxes.
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It has nothing to do with whether they're profitable or not.
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In fact, as you look around the state, you'll see that the,
23:30
large for-profit health systems are oftentimes less profitable than the not-for-profit
23:35
ones, which is just— And that the 990s show less charity care than is portrayed often.
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That's what blew my mind when we finally took time and looked at the 990s.
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But some of them are doing more than you might think. And so it's not uniform. Exactly.
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And we do have, and we've talked about this a bit as it relates to the access
23:58
tier, we do have two very different health care systems we're dealing with as
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a state. There's urban and there's rural.
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And those are very different challenges that need to be solved very differently.
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And that's where some of the complication comes in.
24:12
It is, right? Because again, you're trying to solve two very,
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very big, very, very unique problems for one set of folks.
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And trying to message it is where we're just a lot of work to do right like
24:24
it is trying to be respectful and courteous of our members to understand like
24:27
i've had some members like hey i really want to go to a preferred provider and
24:31
help i understand where you're coming from there's just none around me what should i do,
24:36
you know they're thinking of it from like a systems point of view and it's like.
24:40
You know there's access providers if you're traveling you're like we can try
24:44
to think through things creatively together but.
24:47
Healthcare is inequitable in the state of North Carolina from where resources
24:50
are distributed right now.
24:52
Not something we can fix immediately, and that's why we needed a really big,
24:55
robust access tier, and that's why we needed to invest in making the specialists
24:59
copay cheaper, because we can't penalize people for their specialists in rural
25:02
communities. That's not a reasonable proposition.
25:06
And my job is to make sure there is more specialty providers in the preferred tier as time evolves.
25:13
Right we want to be inclusive in terms of making sure there's independent providers
25:17
because there's not a health system in every county in north carolina but there
25:20
are doctors and to the extent we can align on values pricing quality and access,
25:26
we are going to expand the tent to get more providers in,
25:30
but we started with primary care and behavioral health and surgeries because
25:34
one's the quarterback one's the most impactful this year was really about where's
25:38
the money right where are the big dollars and it's that you know like y'all
25:41
just talked about It's at health systems.
25:43
And then how do you grow it so we're all aligned on mission and value?
25:47
And I think we've shown we're willing to be good partners. We're shown we're
25:51
willing to pay it forward to the members first.
25:53
Because if the member doesn't engage, this is, you know, this is a PhD thesis
25:57
that no one's going to read at any point in time.
25:59
And that's why we are so committed to making the benefit richer in the preferred
26:03
tier because we really got to show folks, these folks are valuing you.
26:07
And I can't give anyone a $7,000 raise. I mean, I think maybe 50 people I can plus or minus.
26:13
But we can, for those sickest folks, drive down your healthcare costs by thousands
26:18
of dollars a year. And Loretta schedules kind of talking sessions with me and
26:22
state employees and teachers across state.
26:24
We have a lot of, you know, a good number of folks that are spending 10,
26:27
12, $13,000 a year on healthcare.
26:30
And shame on us if we don't try to make that number lower because there are opportunities to do it.
26:35
And that's where we're kind of targeting is those folks that are getting just
26:40
absolutely drilled, like, you know, to borrow a phrase from that treasurer,
26:43
the healthcare safety net is broken.
26:46
Our job is to make healthcare more affordable. And we're starting with our sickest
26:49
members and our lowest income members as sort of the target and framing.
26:53
And then we got to continue to build up on that.
26:55
And so that's really the goal and the intent of this is how do you improve upon
27:00
a system that's bankrupting people, that is inaccessible for a lot of people,
27:06
but also we can make better with some behavior change.
27:09
But I can't make people value state employees where I can show the value,
27:13
I can value them, I can fight for y'all every day, But some folks have different goals.
27:19
You know, I think there's a health system. It's like, you know,
27:21
we treat everyone the same. We want to look at everyone the same.
27:24
Same, same, same, same, same.
27:26
It's probably not the partner for us, you know? The folks that say,
27:29
we want to see more state employees. We are willing to charge you less for those things.
27:34
I got to run towards those people. Yeah. So speaking of cost,
27:38
and you brought this up earlier, let's talk about the premium increase.
27:41
And the headline out of the meeting, I guess it's the most eye-catching, was 5% increase for all.
27:49
And Loretta schooled me a little bit on that. Well, we keep saying Loretta,
27:53
y'all. It's Loretta Benini, who is the communications director for the treasurer's office.
28:00
And who y'all would know that name? She came from Spectrum News.
28:03
So she's in the room. We keep looking at her and saying her name.
28:06
I just wanted to clarify that. So, you know, everyone sees that number and they're
28:10
comparing it to the 3% pay increase they just got.
28:13
You know, I've replied to a few comments and explained that those are not the
28:18
same. That's not an apples to apples comparison, you know.
28:22
The 3% raise is much larger than a 5% premium increase, you know? Yeah.
28:27
And just a couple things and like a brief venting.
28:32
I think the headlines were pretty lazy, to be perfectly honest with you.
28:36
But also it is, I get it. Like, if you do two percentages, you're like,
28:40
well, five is bigger than three. Right.
28:44
But we were, you know, and we were trying to think about it more in dollars
28:46
and kind of total cost of care of things, right? Dollars per month.
28:49
Dollars per month is sort of how we think about it.
28:52
So for state employees that make $50,000 a year below, it's $1.76 a month more,
28:59
which your 3% increase is more than $1.76 a month.
29:02
You know, I understand inflation and a lot of other things are going on as well.
29:05
So I'm not trying to minimize that.
29:08
And on the high end for individual coverage, it was $8.06. So not 5% of your
29:13
salary, which is a lot of people.
29:15
And that's why we're trying really hard, I think, to change the language.
29:18
Which is like, let's move away from the percentage and like the dollars that
29:21
you are spending on healthcare that are different.
29:23
Because when I sit down and balance my checking account, I'm not doing like,
29:26
oh, I have 6% money. Like I have, I have this much, like this much going out
29:31
and this much coming in and trying to think about it that way.
29:33
You know, no number up is going to make anyone happy, but our job is to make
29:38
it less confusing where we can and kind of be transparent on the totality of the cost impact.
29:43
I think Kim Jones, one of our board members, brought up a really good point,
29:47
even for folks in the access tier. If you had to see one specialist next year,
29:52
and a lot of folks are, you know, they see a primary care provider,
29:55
they kind of see the thing.
29:57
Because of the reduction to the specialist co-pay, you will pay less,
30:01
you know, all things being equal in 2027 and 2026.
30:04
The preferred tier is like sort of an easy one because it's like, well, it's like half.
30:08
And it's hard to think about the total cost of health care because premiums
30:13
are a number you see. It's very tangible.
30:16
And we need to do a better job. I need to do a better job with thinking about
30:19
the total cost of health care and wallet, right? Because your wallet doesn't
30:22
care if it's your premium or a $1,000 bill. It cares about, I got this much
30:26
going out. Shipping away at it. Yeah.
30:28
So we're going to try to do a better job of thinking about the totality of things.
30:32
And again, any number up, I appreciate, is not what anyone's looking to do because
30:36
everything else is going up.
30:37
And that's why when we think about benefit design, that's an area we can impact
30:41
to make it go down because I can impact the prices of health care.
30:44
And I think we've demonstrated that a couple of years in a row.
30:46
Like, we're going to keep fighting to push that number down on y'all's behalf.
30:50
Because literally half the workforce was working during the time, which was no premium.
30:57
That was the standard. And the idea was that you make less as a state employee,
31:02
and because of that, your benefits would be superior.
31:06
I mean, we ditched that a long time ago. Mark, I'm sorry.
31:09
I disagree with that. The health plan continues to be a very good benefit,
31:13
maybe less good than it was.
31:15
I'll take that point. But if you do any comparison to folks who get commercial
31:20
insurance, the average premium in the state is $185 for a single member.
31:25
And at our median premium is something like $50 to buy all in.
31:31
But the average wage is not what... I understand.
31:35
And 50 is more than zero. Of course, that's true. But at one third of the cost
31:40
relative to commercial insurance, it continues to be a very good deal.
31:44
It's not as good as it may once have been, but I don't want to lose sight of
31:48
that. There is a good deal embedded in the state health plan still.
31:52
Before we get too far away from the tiers, because this is a question that I got a lot.
31:57
So which one of those tiers is the equivalent to the 70-30 or the 80-20? Access.
32:02
So the access tier, and this is a couple— There is confusion over that. There is.
32:07
And I've just been like that. No, no, I think that's a perfect— Like they're
32:09
not even a thing anymore. We have these tiers now.
32:12
So the access tier is exactly the 80-20 and 70-30 from last year,
32:18
but for the specialist co-pay is cheaper.
32:21
Gotcha. And one other difference that I think is a positive difference,
32:26
no one in life gets to decide where an emergency happens. Right.
32:29
So there is no non-preferred for the emergency tier and the inpatient state that comes with it.
32:35
If you're having a heart attack, go to the nearest hospital.
32:36
That's great. We're not going to penalize you for that. That's irresponsible.
32:42
So that is the other difference. But if you thought about what is the benefit
32:45
I have today, it is that access tier because it's where most of the doctors
32:48
are and where most of the folks access their care.
32:52
Care. Thank you for that clarification. Along those same lines,
32:54
and I don't know if this is a good question or not, but are any providers in
32:59
North Carolina considered out of network for the state health plan?
33:04
So, no one new is out of network, right? If you are going to see those providers
33:09
today, we haven't taken anyone out of the network. No one has told me they're
33:13
opting out of the network.
33:15
You know, some folks are out of the network right now, and none of them are
33:18
hospitals. None of them are ambulatory surgery centers. You know,
33:21
there's some primary care doctors that do direct primary care.
33:25
They've elected to stop taking insurance.
33:27
But that's agnostic of the changes we're making here today. So,
33:31
no one has gone out of network. I guess that's what I'm getting at,
33:33
that this change hasn't knocked anyone out of network.
33:37
No, we're not. Our goal is not to take anyone out of network in these plans.
33:41
And that was kind of tagged on to which one's the 70-30 and which one's the
33:45
80-20. And, you know, am I still in network?
33:48
Yeah. So let's go to the action taken Friday that some of our members are very excited about.
33:54
You are changing from Aetna to the Blue Cross Blue Shield of North Carolina
33:57
as the third party administrator.
33:59
And pharmacy benefit. And pharmacy.
34:02
And I guess CVS was the, CVS Care Mart was the first.
34:06
So, and that'll be in January of 2028. That's a really important distinguishing.
34:12
For providers, 2027 expansion, Blue Cross is coming back as a third-party administrator
34:17
and pharmacy benefit manager in 2020. Because it takes you a very long time
34:20
to set that up. It's a lot of doing. Caroline told me it's not enough time.
34:24
Oh, goodness. Yeah, we'll be good and we'll do very well. I think,
34:27
you know, we have a great team up to it that is very eager. I think Blue Cross is very eager.
34:32
So I'll admit that I'm not watching as closely as maybe Suzanne is,
34:36
the health plan. But the last I heard from you, there was nobody, nobody submitted a...
34:42
No, yeah. Proposal. So, how did this work? Yeah, so we, you know,
34:46
we tried to follow procurement laws pretty tightly.
34:49
And for the TPA, three folks submitted a bid. None of them met minimum requirements.
34:54
Okay. And a lot of that is administrative goofiness, I'll say,
34:57
by all three. You know, you forget some forms and you've heard some things like that.
35:00
So, we went back out the following week and we had two people meet minimum requirements.
35:06
And then we were able to go. So, the process was delayed six or seven days,
35:10
I want to say. But in the aggregate.
35:12
Okay. That was, you know, we do our, we got some folks with pretty sharp pencils
35:16
for I's and T's over there.
35:18
And so we were able to get to the same place. It was just a week later.
35:21
I think, Treasurer Briner, one of the times that you were on our show or podcast,
35:27
we had talked about CVS Caremark and there was a kind of a dispute with them.
35:31
Do you foresee a similar thing with Blue Cross or do you feel better about?
35:36
So, and I'll ask Tom to add some detail here, but we went out for a very different
35:42
PBM relationship this time.
35:44
And, you know, I think people typically think of the three big PBMs out there,
35:49
and you'll note that Blue Cross is none of them.
35:51
And there's a reason for that. We're looking for a fundamentally different relationship.
35:56
The way that often PBM relationships work is opacity hides profitability,
36:01
and you can't see that as the payer.
36:03
And we weren't going to put up with that anymore. So we wanted something different.
36:07
We asked for something different. We're going to get something different is how I'd say it.
36:11
Yeah, I think that's right. So, you know, we've all talked about this.
36:14
You know, the big PBMs have shell corporations that are here and a little bit
36:18
of money comes out there and a little bit of money comes out there.
36:21
We intentionally delineated who's processing the claims versus who's doing the
36:26
rebates and who's doing the specialty management to who's doing the mails.
36:30
So they're all trying to do the best at their specific jobs,
36:34
not figuring out, you know, shave a couple cents off here.
36:37
And Blue Cross is bringing that all together on the, you know,
36:40
as a fiduciary partner of the state health plan so that we have better kind
36:43
of protections and alignment. And it is a very different way of thinking about things.
36:47
But I do, I am really excited about us having better confidence in where our
36:53
money is going and more transparency insight into where our money is going.
36:57
And letting people just focus what they're like. A lot of these companies do really good work.
37:02
We just want you to just do that thing really, really well. Don't worry about
37:05
that other mess and five bucks here, three bucks there, having a company in
37:08
Ireland and then having another company somewhere else. Like, just do this.
37:11
Just make sure there's a great benefit for state employees.
37:14
So we've hopped around a lot on these questions. So let's just go for it, whatever else.
37:19
So, and I'm just kind of asking basic questions today because I've been hit
37:23
with a lot of them lately.
37:24
I also think folks were excited to hear that Blue Cross Blue Shield is coming
37:28
back, but a lot of people don't understand that a Blue Cross Blue Shield policy
37:34
is a completely different thing than the state health plan.
37:38
The third party administrator handles the paperwork, the claims,
37:42
that kind of thing. We use their network.
37:44
You got it perfect. Yeah. But the state health plan designed its own benefit.
37:49
So it's not an actual. Yeah.
37:52
Yeah. Yeah, so they're gonna process our claims. We're gonna leverage their
37:55
scale like they can leverage our scale. We're gonna leverage their kind of North Carolina-ness.
38:00
And, you know, I think, you know, they're excited to learn from their mistakes
38:06
and move forward on something that is truly a benefit to these employees.
38:11
So retirees have been concerned about how this will affect them.
38:16
And, you know, we've been trying to explain to them that, you know,
38:18
your Humana retiree doesn't have anything to do with you.
38:22
There were some changes to Humana. They were not premium increases.
38:27
There were some benefit costs that changed within their plan.
38:30
But their premiums didn't go up. And maybe touch on how this does not affect them.
38:35
Yeah, well, so take one step back. After the last board meeting,
38:39
I got a call from you, and you're like, what the heck's going on with this rate
38:42
going up to six? And I was like, that didn't happen. Ah, and I was like,
38:46
I could totally see how that message was lost. So thank you.
38:49
I was actually driving to pick up my kids from school. I was like,
38:52
oh, boy. And then Loretta came over and shot a video in my front yard.
38:56
So yeah, so the Preferred Provider Program is not part of the Humana benefit.
39:03
The benefit you have with the plan design changes is what you're going to have.
39:07
There's no provider tiering and it's still a broad PPO.
39:10
And that is because Medicare rates function a little bit differently than commercial
39:14
rates. And our ability to influence those rates is much more to learn because
39:18
they're more federally set. Like the federal Medicare Advantage program is sort of what it is.
39:23
I'm sure they'd like my opinions. I don't think they're going to take them. They'd listen.
39:26
So that will look different. If folks in the 70-30 plan, they are generally
39:31
on that plan for prescription drugs.
39:33
That benefit is gonna look like what it is today.
39:36
They can save some money by going to preferred providers in the 70-30 plan.
39:41
It's not going to be a lot because, you know, we are the third kind of second
39:44
or third payer, depending on that kind of construct there.
39:47
But for folks in the Humana plan, there is no change to the network or no change
39:51
to the approach to the network.
39:53
And the non-Medicare retirees fall into? That's a great question.
39:57
That is kind of everything we talked to you about before applies to them,
40:00
right? The preferred tier, the access tier, the non-preferred tier does directly
40:04
relate to the non-Medicare retirees. Thank you.
40:06
So, Thomas, I know that a tremendous amount of work of your staff,
40:11
your entire staff had to go into this. I can't even imagine how much work went
40:15
into trying to even construct this. What's next?
40:19
How long do you go once it's implemented before you decide, is this work?
40:25
Yeah, that's a really good question.
40:27
So, I am very passionate about, we can't make these dramatic changes.
40:32
One year's this, one year's that.
40:34
Our members are people, not cattle. We have to give them continuity and consistency of things.
40:39
So, you know, I think about thinking about these contracts every five years or so.
40:43
But if they're also, they're working and people are happy and saving money and
40:47
we're able to invest in their health, I'm not inclined to make a giant change
40:51
to save one or 2% more money.
40:54
If people are getting the health care they need and somewhere they're happy
40:58
in situations, I don't foresee this system change as being something we will
41:01
process it and make sure it's working, right?
41:03
Make sure we're saving the money and the math is mathing on all of those things.
41:07
But I think where we're going next is I think a couple of things.
41:10
And we had a really good consumer segmentation study about what our members value.
41:14
And about 50% of the members said they wanted plans with richer cost-sharing
41:19
benefits, lower copays, lower deductibles.
41:21
And about 50% of them more preferred lower premium plans with more kind of benefits
41:29
attached to it. Like kind of a different, like a little bit different look and feel of things.
41:32
So I think our job is to come up with, given we have these better rates with
41:38
a lot of systems, can we come up with an additional plan to put aside these
41:41
that's a lower premium plan that has more flexibility for different members
41:45
who want to do different things?
41:48
I think the answer is yes, we can. I think we've got to figure out what that
41:50
needs to look like. So it's one, attractive, maybe a little simpler,
41:54
but allows people maybe they want to save for healthcare, like healthcare retirement
41:58
or something. People are going to want different things, right?
42:00
You know, that kind of 50-50 split.
42:02
So I think we need to figure out what is a plan design that is intentionally
42:06
kind of targeted at lowering premium, like a lower premium product,
42:10
which is something I think we can do.
42:11
I think we just kind of have to go through the implementations and then kind
42:16
of get to that for 2028 is something we're thinking about. And I guess the other
42:19
thing is next is circling back to something I said.
42:22
How do we get more preferred providers in rural communities?
42:27
Yeah, and what can members do? You know, they want to have a voice.
42:30
So how can they help? Can they help you do this?
42:34
Yeah, I think they definitely can. I think it is, the more members who use preferred
42:38
providers, the more leverage and strength we have.
42:41
The less people use non-preferred providers, the more strength we have.
42:44
We can show that we're serious.
42:46
State employees are good shoppers, they're smart people. The more we can show,
42:50
we understand what we're doing and we can leverage those things,
42:54
we will get better savings, we will get deeper discounts, we will continue to
42:58
move the ball forward on things.
43:00
You know, I would love to hear from members what areas they would like to see
43:03
kind of focus. And I think part of our consumer segmentation study,
43:06
which, as Beth mentioned, broke the internet for a day. We had so many responses.
43:10
Continuing to say, like, where we need to keep moving towards,
43:14
I think, is really, really helpful feedback.
43:16
And just, you know, and kind of knowing, like, I'm ready to dance with any partner.
43:20
If the partner doesn't want to dance with me, though. Right.
43:23
There's only so far we can go.
43:25
So I just have three quick questions.
43:28
Go for it. Just kind of clean up here. So, first off, if a non-preferred provider
43:34
decides they want to be a preferred provider, is that possible?
43:38
Like, are you still— Good question. From a health systems perspective, no.
43:42
So, part of this is kind of going back to the treasure board.
43:44
It's a competition, right?
43:45
And how the preferred providers are able to afford, from a systems point of
43:49
view, are able to give the discounts they're able to give is because they're
43:52
going to get more volume.
43:53
That's the investment. Oh, so it's set in stone for— For the health systems,
43:57
it is Novant and UNC. A year, or— I would like it to be this way for five years.
44:02
Five years. So our members have assurances, like, if we build a relationship
44:05
with these providers, we're going to continue to save money because they've invested in us.
44:10
Well, wait a minute. If somebody's living in Charlotte listening to this,
44:12
I already know what they're going to get on our Facebook page and say,
44:15
well, wait a minute. What if, what if Atrium came around and saw the light?
44:19
And it would be easier for these folks to find somebody, obviously.
44:22
You know, I appreciate everyone's individual concerns. Yeah.
44:27
We are trying to look at all 700,000 people.
44:31
Fair enough. And it might be easier for that individual. But I want to circle
44:34
back to one thing about individuals.
44:36
If you're having a baby, if your baby's in the NICU, if you have cancer,
44:40
if you're waiting for a transplant or you have some rare condition.
44:44
We have broad benefit exceptions that we are going to be very generous with
44:49
and intentional with to keep people with their providers when they're undergoing
44:53
really complex treatment.
44:54
If you're at a non-preferred, if you're at atrium for cancer treatment right
44:57
now, you are not going to be paying a non-preferred benefit in 2027.
45:02
We will have information coming on how your benefit will stay kind of going
45:06
back to what's the 70-30, what's the 80-20, it will retain the benefit you have
45:10
today while you're in active treatment for care.
45:13
We're not asking you to be like,
45:14
hey, I know your baby's in the NICU right now, but them's the breaks.
45:17
You got to pay more. No, it's going to be the benefit you have today.
45:20
Nobody's going to be left to charge when it's serious. Yeah,
45:23
and so, you know, I think I appreciate there's going to be some FOMO for folks,
45:27
and I am willing to understand and entertain if folks want to get out of the
45:32
non-preferred tier and get into the access tier.
45:34
I'm happy to have that conversation and figure out math that works for everybody,
45:39
but if there's a winner there's gonna be a loser it's just the kind of the reality
45:43
of business i think right like only one person can win your business,
45:47
right and so yeah i think we're you know and i think atrium is a great health
45:52
system but you know they said our focus is on treating everyone other folks
45:56
said our focus is on treating state employees.
46:00
Again, I got to dance with who wants to dance with you. All right.
46:02
Fair enough. And you answered one of my other questions, but I just want to,
46:06
I guess, finally turn to Treasurer Briner. You did mention the $507 million
46:11
shortfall when you came in.
46:14
With all these changes and everything from last year, where do we sit now and
46:19
how do you see it moving forward? Yeah.
46:21
It's truly been a team effort. And we've seen everyone do their part.
46:26
So that $507 million is an artifact of history at this point.
46:29
So credit to Tom and his team and credit to all the employees who've invested
46:34
more through premiums, through the legislature, to everybody who got that done.
46:39
It was $1.2 billion for the following year, and we're almost done with that, too.
46:44
With these changes, they work out the way that we think we're on to,
46:48
like, we're in about 2029.
46:50
We're never going to not worry about the future of the state health plan.
46:53
Like the deck is stacked against you as a healthcare consumer.
46:57
And so we're going to keep pushing and we're going to keep pushing those dates
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out, but we can't stop pushing.
47:02
In terms of sustainability, then we're in a much better place now. Much better place.
47:07
We're in a much better place. We've got the basic recipe in place that we think
47:11
will age really well and we can push that out indefinitely.
47:16
Well, you have, and I've always said it, you have the hardest job in state government.
47:19
The treasurer is the hardest job.
47:21
It is the most stuff. It is stuff that dwarfs the size of the entire state budget.
47:27
It's the hardest to solve.
47:30
And it matters to so many people. It does. And it's amazing how many people
47:34
don't know it matters to them.
47:36
But we have a great team who is doing a lot of good work across all seven of
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our divisions. We talk a lot about the state health plan because it's front
47:43
and center for people. But we touch your lives in a lot of different ways,
47:46
too. And I'm just proud of my team's results.
47:49
Yeah, you got great people. And Thomas is coming to, for all of you listening
47:53
out there, is coming to have some conversation with our board this week.
47:58
And he's also, as he said, open to, you know, making some trips to speak to
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smaller groups. I know we had talked about that before. Wherever you want to
48:05
be, if it's in person or webinars, my job is to be where you tell me to be.
48:09
I assume someone will be at our convention as well, right? Yeah.
48:12
Thomas is out. You're stuck with me.
48:15
Well, we got the big gun. No offense, Tom. I'll be there, too.
48:18
He's speaking first. I think I'm second. Okay.
48:21
Well, thank you so much for coming in. And you've always been very open with
48:25
us and willing to engage. So thank you very much. We appreciate your partnership.
48:30
So much of what we need and want to do involves engagement.
48:35
And you guys are fantastic in helping state employees have a voice back to us
48:40
and vice versa. So we really appreciate the partnership. We couldn't do it without you.
48:45
Thank you. Thank you. Thank you for joining us for this week's edition of the Scenic View podcast.
48:49
I thought it was a great conversation with State Treasurer Brad Briner and also
48:53
Thomas Friedman from the State Health Plant.
48:55
This is a very complicated issue, so please stay tuned to our website,
49:00
scenic.org, and our Facebook page will keep you updated and informed on what
49:05
changes are coming. Thank you.