State employees, retirees to be charged extra for using WakeMed

Thousands of state employees and retirees living in or around the Triangle will soon face significantly higher costs for care in the WakeMed network — part of an effort by State Health Plan administrators to close a massive budget gap.  

The upshot: People who get their health insurance through the plan might be need to change doctors and be more careful when seeking specialists or urgent care help.

Starting in 2027, members of the State Health Plan who continue to use many WakeMed services and providers will face higher deductibles and out-of-pocket costs, although there are some exceptions including for primary care doctors.

WakeMed told WRAL on Wednesday that the state's decision will upend the lives of the thousands of State Health Plan members it serves, and that it will have adverse affects on the health system that's one of the largest employers in Wake County and the state as a whole.

"This is an extremely damaging decision for WakeMed and for the thousands of teachers and state employees who depend on us for care," a hospital spokesperson wrote. "It will have serious financial consequences to WakeMed, as a not-for-profit, safety-net health care system, and for the community that has relied on us for more than 65 years."

Those who use healthcare services only rarely probably won’t see substantially higher costs if they choose to use WakeMed for their rare visits. But those who use lots of healthcare services could be forced to spend thousands of dollars more per year — for some, possibly as much as $10,000 more.

WakeMed operates three hospitals in Raleigh and Cary, as well as dozens of other offices including primary care physicians, physical therapists, urgent cares and specialists in fields ranging from weight loss to oncology, pediatrics and more.

The health plan this month approved a preferred-provider program that steers patients toward certain providers, including UNC Health, while raising costs for others. Consolidating care and negotiating deals with preferred providers is part of the health plan’s efforts to manage rising healthcare costs and solve a deficit reaching into the hundreds of millions of dollars.  

Thomas Friedman, the health plan’s director, told reporters in a briefing this month that he and other state officials will be ramping up outreach to state employees to try to get them to change their behavior and avoid seeing their bills rise — and to take advantage of other new changes that could help them save potentially thousands of dollars a year, by going to different doctors. 

“Some people like email,” Friedman said. “Some people like video. Some people like mail. Some people like calls. We've got to do all of those things exceedingly well because we’ve got to meet folks where they are, and how they want to be communicated with. And some folks don't want to be communicated with at all. Unfortunately, those might be the folks that get a really shocking first bill.”

Elsewhere in the state, Charlotte-based Atrium Health is also on the non-preferred provider list.

State Treasurer Brad Briner, who runs the State Health Plan, was an early and vocal critic of a proposed merger between Atrium and WakeMed.

Briner has said other hospital mergers have led to higher prices and expects this deal, if approved, would do the same. WakeMed and Atrium dispute that.

State Health Plan leaders said the decision to effectively punish members of the plan if they keep using Atrium or WakeMed had nothing to do with political opposition to the merger proposal, and everything to do with other factors: The bids they and other hospital companies submitted, the quality of care at their facilities and how many facilities they operate.

The new preferred-provider program creates a three-tiered system of doctors’ offices and hospitals statewide.

The new tier system doesn’t apply to every type of healthcare. Emergency room visits are exempt, all considered in the “access” tier no matter which provider. And for at least the first year, and possibly longer, the changes also won’t apply to maternity care for pregnant women, new families with children in neonatal intensive care, cancer patients and transplant patients

But for other specialist visits and more, people have the potential to pay thousands of dollars more, or less, depending on who they use.

In the Triangle area, UNC Health is the state’s preferred provider. Novant, which has offices in the Triad, Charlotte and Wilmington, also has preferred status.

That means members of the State Health Plan who use UNC or Novant will receive a discount on their deductibles and out-of-pocket maximum costs, potentially saving several thousand dollars each year compared to now. It also means higher costs for people who don’t, particularly if they use non-preferred providers.

But when state officials made that announcement about preferred providers on Friday, they didn’t immediately say who would fill in the tier system’s next two spots in the Triangle, called “Access” and “Non-preferred.”

That changed on Wednesday, when health plan leaders announced Duke Health would be an “access” provider and WakeMed would be “non-preferred.”

Friedman said Wednesday that WakeMed is "an excellent facility" but that Duke agreed to charge lower rates to the state and had other factors in its favor.

"Given the substantial number of patients who utilize Duke Health, their excellent quality and many complex services they offer for our sickest members, and a significant discount off current rates, we felt this partnership aligned perfectly with our commitment to quality, access, and affordability while minimizing patient disruption," he said.

Duke Health chief executive David Zaas said they were pleased with the announcement.

“Serving State Health Plan members is both a privilege and a responsibility for Duke Health,” Zaas said. “Our priority is making sure State Health Plan members and their families can continue turning to Duke Health. We're grateful to Treasurer Brad Briner and his team for working with us to reach an agreement that preserves access to Duke Health for the people who serve our state every day.”

WakeMed spokesperson Kristin Kelly said state officials blindsided hospital leadership with the decision Wednesday to choose Duke as the "access" provider instead of WakeMed, noting that WakeMed was requesting further meetings on the issue as recently as Tuesday.

"We do not understand why State Health Plan administrators would eliminate patient choice and access to not only a low-cost provider but Wake County’s largest provider," the spokesperson said. "... WakeMed remains without direct engagement from the State regarding its evaluation methodology or selection criteria, or any explanation for this decision."

The new tier system affects only the 750,000 people on the State Health plan, not the millions of other North Carolinians insured through private employers or other government programs such as Medicare, Medicaid or the Affordable Care Act.

Those on the State Health Plan could soon be charged as much as thousands of dollars more per year if they keep using WakeMed, and could save thousands for using UNC. The exact amount depends on whether they have the standard or plus plan, and whether they insure any family members.

• For an individual on the standard plan, their 2026 out-of-pocket maximum is $6,500. Starting in 2027, it’ll remain $6,500 for those who use Access providers. It will drop to $4,000 for those who use preferred providers, but rise to $12,000 for those who use non-preferred providers.
• For a plus-level family plan, the 2026 out-of-pocket maximum is $10,000. In 2027, it’ll rise to $15,000 for care at access providers and $20,000 at non-preferred providers, but it will drop to $9,000 for care at preferred providers.
• For people who use a mix of providers, the billing could become more complicated. But no matter what, they won’t be charged more than the out-of-pocket maximum for non-preferred providers, and many would likely be charged less.

Friedman noted that no one will be forced to leave their doctor if they don’t want to.

“You don't have to do it,” he said. “You are welcome to go with our access or whomever our non-preferred partners are. You are going to pay more. It's going to cost more, but we're not going to take that option away from you.”

The tier system is meant to save the state money while also saving individual members of the State Health Plan money.

To achieve that goal, the plan asked hospitals to agree to charge lower rates than normal to be named a “preferred” or “access” provider. In exchange, the state will funnel business their way — through a carrot-and-stick model of offering discounts at preferred providers as well as punishing people for going to other non-preferred providers — with the idea that the hospitals willing to charge the state less will still make more money due to the increased volume.

Friedman said the current tiers will probably remain in place for at least a few years so that members of the State Health Plan don’t face constant whiplash of changing doctors constantly, although he added that if a company comes in with an aggressive deal, things could change.

“We're open for business,” he said. “You want to compete for it, we are open to folks competing for business. [Preferred providers] chose to compete really hard for it. That's how capitalism works.”

Cristy Page, the chief executive of UNC Health, told reporters Friday she’s already ramping up hiring in anticipation of more patients from the State Health Plan making the switch to take advantage of the potential savings. She said it makes sense for both UNC and the State Health Plan if people don’t run into long wait times to schedule an appointment due to this new change.

“We're working on new and creative ways to make sure all North Carolinians receive high-quality care, no matter where they live,” she said. “We've been actively working on expanding access, workforce, and technology to prepare to serve more patients.”