Atrium Health and N.C. State Health Plan leaders have reached an agreement bringing the sprawling hospital system back in-network for 750,000 state employees and retirees.
N.C. Treasurer Brad Briner, a Republican, announced the agreement at the beginning of Tuesday's meeting of the State Health Plan Board of Trustees.
"Against a backdrop in healthcare that goes up 10 or 15 percent each year, holding flat is very good value. We now have agreements in place with all four of the largest health systems in our state," Briner said.
Under the "multi-year" agreement, all Atrium doctors and facilities will once again be in-network for State Health Plan members and part of the plan's "Access Tier" beginning in 2027. That effectively maintains 2026 prices for health plan members.
The agreement brings an end to weeks of uneasiness for tens of thousands of State Health Plan members who receive care from Atrium doctors or at Atrium hospitals.
"For every teacher, state employee and family member we serve at Atrium Health, this new agreement is about providing the peace of mind that comes from knowing the caregivers they trust will remain within reach," Steve Smoot, the president of Atrium parent company Advocate Health's North Carolina and Georgia division, wrote in a joint press release with the State Health Plan.
Under the agreement, Atrium will stop offering the Affordability Protection Program it had announced for State Health Plan members while plan leadership will withdraw the lawsuit they filed in an attempt to stop it.
A public back-and-forth
The dispute began in July when State Health Plan leaders chose Novant and UNC Health as their preferred providers, reaching an agreement in which those systems agree to provide both the Health Plan and its members lower rates in return for the likelihood of additional business from its members.
Days later, the State Health Plan announced that it had reached an agreement with Duke Health for that system to enter the Access Tier for 2027.
"By aligning our members' interests with the plan's and by negotiating directly with those providers, we put the State Health Plan on a much better track," Briner said Tuesday.
Health Plan leaders created the tiers in an effort to address its long-standing financial challenges. They are trying to give hospital systems an incentive to charge both it and its members lower costs.
The health plan initially classified Atrium as a non-preferred provider, a tier in which its services would cost members significantly more than non-preferred and even access tier providers.
Atrium responded, it said later, by offering to match the preferred provider rates. But that was a non-starter for health plan leaders because it would undercut the agreements they'd already reached with Novant and UNC Health because granting it would make it less likely those systems would receive the additional business making the lower rates worthwhile for them.
Then, in September, the health plan and Atrium announced a limited agreement bringing some of the system's rural facilities and children's hospital into the Access tier.
On October 6, Atrium announced that it would launch what it called its "Affordability Protection Program," under which it planned to offer State Health Plan members lower copays than those it would receive at preferred providers while also waiving deductibles and coinsurance.
State Health Plan leaders quickly fired back, arguing that Atrium was poised to offer members savings but not the Health Plan itself. Costs could quickly reach as much as $250 million, they estimated.
While Atrium's plan would result in short-term savings for members, Briner said, it would push long-term costs up. Those would include a potential $50 per month across-the-board premium increase as soon as 2028.
Atrium, for its part, has argued its pricing plan was meant to help state employees afford healthcare, not harm the State Health Plan.
"We share the concerns about the solvency of the NC State Health Plan, so it’s unclear to us why the Plan rejected our offers to save money for taxpayers and members," Atrium wrote in an Oct. 7 press release.
The State Health Plan sued in Wake County Superior Court on Oct. 9, arguing that Atrium was effectively trying to implement a rate structure for the Health Plan. A judge on October 14 denied a temporary restraining order against Atrium's plan, finding that Health Plan lawyers had not demonstrated that they were likely to win the case.
That was when Briner and the Health Plan moved Atrium to out-of-network status, a move they said was necessary to protect its financial interests if Atrium intended to continue offering its Affordability program.
"I will not let one hospital system destroy the Plan, raise premiums on every teacher and state employee and send us into overwhelming debt," Briner wrote in an Oct. 14 press release.
Atrium and State Health Plan officials have been discussing the situation non-stop in recent days in an effort to settle the matter, with conversations spilling into weekends.
Tuesday's agreement will result in the State Health Plan paying lower rates for the services its members receive at Atrium facilities than it has previously, Tuesday's joint press release said.
In return, the hospital system and its doctors will be in-network again, preserving access for thousands of state employees and retirees, especially around Charlotte and in the Triad.
"The Plan and Atrium Health recognize the past few months have been unsettling for members and their families, and each have committed to put any differences aside to move forward and keep working together for the benefit of every teacher and state employee who counts on them both," the joint press release said.
Open enrollment for State Health Plan members will end on November 6.
