NC Treasurer calls for US Dept of Justice to recover funds potentially owed to NC taxpayers

Treasurer Dale Folwell calls for pricing transparency from all North Carolina hospitals, citing “anti-competitive activities”

Eamon Queeney—The North State Journal
State Treasurer Dale Folwell speaks at a Council of State meeting in Raleigh in 2017. Folwell says of his current push for transparency, “We’re doing what’s necessary at this point in our state’s history because others didn’t.”

RALEIGH – State Treasurer Dale R. Folwell called this week for the U.S. 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 U. S. Department of Justice and the N. C. 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. 

“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 N.C. Healthcare Association, the group representing hospitals around the state, is currently opposing this action and has begun lobbying the N. C. General Assembly to immediately stop the Plan’s initiative to bring transparency.  This opposition, in the form of proposed legislation to preserve the current payment structure until 2021, comes despite the state auditor’s finding of seven years ago that the state is at risk for potentially overpaying medical claims.

Folwell argues that if legislation is passed to stop the Plan, then premiums, copays, and deductibles for the nearly 727,000 teachers, public safety workers, and other state and local employees could increase, and the projected $300 million in savings to taxpayers and $65 million in savings to members would not be realized, impacting 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 U. S. 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.”