NC treasurer tackling cost-drivers, redundancies in State Health Plan

State Treasurer Dale Folwell is continuing his push to eliminate inefficiencies and save money in areas under his jurisdiction such as the State Health Plan and pension management

Eamon Queeney—The North State Journal
State Treasurer Dale Folwell

RALEIGH — North Carolina State Treasurer Dale Folwell hosted his monthly “Ask Me Anything” teleconference on Tuesday to discuss ongoing eligibility audit initiatives for the State Health Plan, renegotiated administrator contracts, and how his office seeks to balance implications of a gradually rising interest rate environment for refinancing plans as well as pension performance.Last week Folwell, a Republican, announced that the State Health Plan will save approximately $8.5 million starting in January 2018 after renegotiating a contract for administration of the NCHealthSmart program. The new terms limit the scope of covered services to focus on primary cost drivers of chronic obstructive pulmonary disease (COPD), congestive heart failure, coronary artery disease, diabetes and hypertension.”A core component of that contract was something called a health management survey,” said Folwell Tuesday. “I think there’s 32 questions on the survey and on nine of the questions you can actually answer ‘I don’t know.’ So, not only did I not think that was a valuable use of resources, secondly people were just filling out the survey and just bubbling in things. … A lot of people filled it out just because there was a credit associated with filling out that survey.”Complexities in linking the survey to the open enrollment process actually hindered the treasurer himself from enrolling in the State Health Plan, and spurred an initiative to simplify the process for enrollment altogether. Folwell said it took 51 clicks to complete open enrollment, but a streamlining effort is projected to reduce that number to less than 10 to complete registration.While simplifying the enrollment process, Folwell also seeks to rid the system of inefficient redundancies, such as state employees being assigned as many as a half a dozen case managers by different parties for one medical procedure.”We are finding in the SHP that there are services that we provide that are being duplicated by other people that we’re also paying,” said Folwell. “Many of the hospitals have case managers; then we have Blue Cross Blue Shield as our third party administrator who has case managers; we have Active Health, who is our population health management vendor, who has case managers; Medicare has case managers. We have a lot of case managers who are trying to serve the same patient for the same instances.”Further, the State Treasurer’s Office has commissioned an audit to clean up State Health Plan rolls that may include a percentage that are not actually eligible to be covered for services.”The industry average is somewhere between 3 and 5 percent,” said Folwell. “We are very serious about following the law to make sure that we are only paying for health care for people who are eligible to receive it.”Though not yet complete, Folwell said they are more than halfway through the eligibility audit of 193,015 enrollees or dependents in the State Health Plan. His goal is to complete the audit before open enrollment in the fall of 2017, so ineligible individuals are prevented from enrolling for another year of coverage.Aside from managing the costs of programs like the State Health Plan, the state treasurer is also responsible for managing the investment portfolios of the state pension plan and oversees state and local government debt offerings and refinancing plans. The overall interest rate environment affects both of those functions in different ways. While low rates make refinancing state and local debt less expensive, those same low rates mean lower returns for bond portfolios held in the state pension plan.”Obviously we want interest rates to stay low, especially for the next 48 hours,” said Folwell. “This is a competitively priced deal, which means it’s an auction and we have people bidding on it. North Carolina has always been, because the work of the taxpayers and previous treasurers has been recognized as a very desirable state to own debt from. We’re very interested in getting the lowest interest rate we possibly can.”Alternatively, “higher interest rates help me on my $32 billion bond portfolio that’s sitting over in the state pension plan,” said Folwell. Adding to the conundrum, “If you look at how [price-to-earnings] ratios are determined, interest rates are a big determinant for price-to-earnings ratios in the stock market.”Folwell said he hopes to take a deeper look later this year at how interest rates affect all sides of the Treasurer’s office; from inflationary pressures that drive up medical costs, to debt servicing costs associated with refinancing, to the overall performance of the state pension’s investment portfolios.