North Carolina State Health Plan leaders will introduce a new benefit structure for most members designed to steer their coverage toward certain providers at a regular meeting of the Health Plan's board on Friday.
Those changes are intended to give the hundreds of thousands of state employees who receive their health insurance from the plan increased certainty about what they'll pay while also helping the plan itself pay less, Health Plan Executive Administrator Tom Friedman told reporters Thursday.
"Our members think with their wallets, and we hope that's going to be the driver here," Friedman said.
While the new preferred provider tier would offer the lowest prices for beneficiaries, there is also a tier called the Access tier that offers benefits for the same cost they are available this year. The sticking point in the plan is that providers who are in-network but designated "non-preferred" are going to cost significantly more, as are out-of-network providers.
The changes would apply to 575,000 state employees and retirees who receive their health insurance through the plan. It does not apply to the roughly 175,000 people, predominantly retirees, who are covered by the plan's Medicare Advantage plan.
Friedman said he's targeting between $100 and $200 million in savings in 2027.
"That is going to take members doing some moving," Friedman said.
For instance, someone who is covered through the Standard PPO Plan will pay $40 to see a specialist who is a preferred provider, $65 to see a specialist in the access tier, pay 30% after meeting a $5,000 deductible for a non-preferred provider specialist and pay 50% after meeting a $15,000 deductible for seeing an out-of-network specialist.
If the plan is ultimately approved, the Health Plan intends to offer maternity care, ongoing oncology care and transplant care at the access level for a time.
Health plan officials are hopeful that providers who are cheaper will, in turn, see a larger chunk of business from its beneficiaries. That, in turn, could result in more revenue even if it is offering lower prices for each individual service.
"I don't always think providers have thought about trading unit cost price for more volume gets you to more volume and more commercial revenue," Friedman said.
North Carolina dipped its toe into the model in 2026 with its Lantern surgery program, which offers some services at no cost to beneficiaries. The thinking there is very similar, with the Health Plan choosing providers who are willing to offer them a lower price in return for a predictable stream of business.
So far, 194 providers have opted into the Lantern model, performing more than 1,000 procedures. The Health Plan has saved about $12 million through the program, according to a presentation trustees will receive Friday.
The state will start identifying preferred providers among healthcare systems because they make up the biggest chunk of the Health Plan's spending. It is likely that medical specialties will be the next place where the Health Plan tries to identify preferred providers, Friedman added.
"We are really thinking through what is impacting the most members and costing the most dollars," Friedman said.
Premium increases likely coming
Trustees are expected to vote on the benefit changes at their July 10 meeting. That will also feature votes on contracts with preferred providers and likely premium increases.
Asked about the increases Thursday, Friedman said, "It's not going to be zero."
Friedman also said the era when premiums remained flat from year to year has likely ended. The Health Plan implemented tiered pricing for 2026, with employees who make more money facing steeper increases.
Health Plan administrators are targeting average increases of about 1% of the salaries of people who are on the Standard PPO Plan and 2% of salaries for people who are on the Plus PPO Plan.
"We want to make sure they're manageable increases," Friedman said.
