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N.C. Senate passes SHP bill focused on contract limits, coverage extensions
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N.C. Senate passes SHP bill focused on contract limits, coverage extensions

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The first of at least four State Health Plan-focused bills has cleared a legislative chamber.

Senate Bill 159 was approved by a 45-1 vote in the Senate on Thursday and has been sent to the House. A companion House Bill 177 cleared the House by a 114-0 vote on May 12.

The key element of the bill would increase the threshold from $500,000 to $5 million that a contract with the State Health Plan must reach before it requires approval by its board of trustees.

SB159 also would permit the SHP to allow parents of a child who is disabled to remain on their coverage past their 26th birthday. Verification of the child’s disability would have to be provided to the SHP within 60 days of the child turning age 26.

The rest of SB159 deals with technical changes.

House Bill 169, which has Senate Bill 174 as a companion bill, has cleared the House State Government and the Pensions and Retirement committees. It has to be approved by two more House committees before being eligible for a House floor vote.

Those bills have as their intent extracting more contract pricing data and details from Blue Cross Blue Shield of N.C. If signed into law, the legislation would go into effect Jan. 1.

House Bill 176 and companion Senate Bill 160 would allow the SHP to authorize private sector wage garnishment of former state employees.

The House version has cleared one of three House committee steps, while the Senate version has not been addressed.

State Treasurer Dale Folwell has said there is about $1.68 million owed from former SHP members that could potentially be recovered through this mechanism.

It also would provide clarity to medical provider debt recovery contracting, and prohibit SHP from having contracts that allow third parties to write off debts owed to the state.

The fourth SHP-related bill is Senate Bill 542, which would allow the plan to “adopt a program to incentivize plan members to report activities, such as fraud, waste and abuse, by health-care providers serving plan members.”

The incentive would be up to 2% of “any net recovery made by the (SHP) resulting from the member report.” The bill was introduced April 5 with Sen. Joyce Krawiec, R-Forsyth, as a co-sponsor.

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Background

The treasurer’s office oversees the SHP, which has more than 727,000 participants that include current and retired state employees, teachers and legislators. It is North Carolina’s largest purchaser of medical and pharmaceutical services.

Blue Cross NC is the third-party administrator of the plan. It has duties that include processing claims, maintaining an in-network listing of providers, and — most importantly — establishing medical provider rates.

The Republican-controlled state legislature gave the treasurer the authority to decide on reimbursement cuts to hospitals and providers as part of a mandate to reduce overall SHP expenses.

Some of the bills represent the latest in a multi-year attempt by Folwell to extract more contract details from Blue Cross NC.

“The secrecy and lack of transparency in health care is what this bill (HB169) is attempting to fix,” Folwell told the House State Government committee.

Folwell has cited repeatedly that in its response to a public-records request to the UNC Health System for contract details that entire chunks of the response, pages in a stack a half-inch thick, were redacted and critical information was unavailable.

According to Folwell, Blue Cross and medical providers consider fee schedules — what they charge — associated with the plan network to be “confidential.”

“Subsequently, the fees charged for medical services are not provided to the plan or its members despite the fact that there are state and federal guidelines that demand transparency,” Folwell has said.

“For years, the plan has paid medical claims after the fact without knowing the contracted fee. It is unacceptable, unsustainable and indefensible. We aim to change that.”

The N.C. Healthcare Association, which opposes the bill, has said “the treasurer already has access to this data, or should have included access in his most recent contract negotiations.”

“Putting this contract impairment into statute is concerning.”

UNC Health said in 2019 that all agreements between hospitals, doctors and insurance companies are proprietary business agreements, are not subject to public release, but are independently audited.

The contentious nature of Folwell’s relationship with health insurers and some legislators likely will put more scrutiny to all four SHP bills, said Mitch Kokai, senior policy analyst with Libertarian think tank John Locke Foundation.

“That doesn’t necessarily mean that the bills will generate a great deal of controversy,” Kokai said. “But those who are watching state Treasurer Dale Folwell’s reform efforts closely will certainly keep tabs on any proposed SHP changes.”

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