By Michelle Crouch and Rose Hoban
Co-published with The Charlotte Ledger
After months of public sparring, Atrium Health and the State Health Plan have reached a deal that allows state employees, retirees and their family members to see Atrium doctors next year at roughly the same out-of-pocket costs they pay now.
The deal comes after State Treasurer Brad Briner, who administers the plan, announced on Oct. 14 that the plan was moving most Atrium providers out of network — a move that apparently prompted the hospital to return to the negotiating table and lower the prices it charges the plan.
“It was not our intent to have this all play out in such a public forum,” Briner said. But he said the negotiations ultimately led to “a much better outcome for our members.”
Under the agreement, Atrium Health will be in the middle of the three tiers in the State Health Plan’s new tiered network for 2027, this means that people seeing their Atrium providers will pay about the same price in the coming year as they have this year. The network is designed to encourage members to choose doctors and hospitals that agreed to provide care at significant discounts, an effort to close a massive budget deficit.
In a joint news release, Atrium and State Health Plan officials said they are committed to putting their differences aside and working together.
“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,” said Steve Smoot, president of the North Carolina and Georgia Division of Atrium parent Advocate Health, in the release.
While the deal makes it easy for state employees to stay with their Atrium doctors, they could potentially save “thousands of dollars” by choosing doctors in the plan’s preferred tier, Briner said. That tier includes Novant Health, UNC Health, Iredell Health and 4,500 independent providers, including Tryon Medical Partners in Charlotte.
“It is your choice,” Briner said. “We want to empower you with that choice and want to arm you with that choice because the best healthcare you get is the healthcare you choose.”
Confusion for state employees
The announcement, for now, ends a contentious chapter that left thousands of state employees unsure whether they could afford to continue seeing their Atrium doctors next year. The uncertainty was particularly difficult for employees in the Charlotte region, where Atrium is the dominant health care provider.
In a letter sent to Briner and Advocate Health CEO Gene Woods last week, the American Federation of Professional Educators in North Carolina, which represents the state’s public school teachers, called the uncertainty “unacceptable” and urged the two sides to return to the negotiating table.
“No public servant should be placed in a position where making an informed healthcare decision becomes a financial gamble,” the letter said. “Allowing preventable confusion to persist during open enrollment, when the consequences could affect a family’s health and financial security for an entire year, is a failure of responsibility to the people these institutions serve.”
The plan’s open enrollment period, when members choose their 2027 coverage, ends Nov. 6.
Briner said he knows the process has been confusing, and he thanked state employees for bearing with him.
“A lot of this has happened in the public domain in a way that I wish would have been privately, so that we didn’t worry our members so much about where they could not go next year,” he said.
Three-month standoff
The dispute began in July after Briner unveiled the new tiered network. After a yearlong bidding process, Atrium was placed in the most expensive, non-preferred tier. That prompted a round of negotiations between Atrium and the treasurer’s office that culminated in a Sept. 14 announcement that some Atrium rural hospitals and its children’s hospitals were moving into the middle access tier.
Most Atrium doctors and hospitals, however, remained in the non-preferred tier.
On Oct. 6, Atrium announced an “affordability protection program” to reduce out-of-pocket costs for state employees that see their providers. The catch, for taxpayers, was that the State Health Plan would still pay Atrium’s higher rates for care, even if plan members were saving.
Briner said this amounted to the hospital system undermining the health plan’s efforts to save money because the plan would still be paying Atrium’s higher rates for care. He also said the Atrium plan could have the effect of bankrupting the State Health Plan.
He went to court to block Atrium’s program on Oct. 9, but a judge denied the request.
Briner then announced on Oct. 14 that most Atrium doctors and hospitals would be moved out of network for 2027.
Within days, Atrium returned to the negotiating table with discounts that were “materially better” than what it had offered in August and September, according to State Health Plan Executive Administrator Thomas Friedman.
It’s not clear yet how much the new Atrium agreement will help the plan financially, Friedman said. “We know folks are going to go to our preferred providers more, but probably less more now, if that makes sense,” he explained.
He said he expects to have an updated projection in four to six weeks.
Timeline: Atrium vs. State Health Plan
July 10: State Health Plan announces a new network with three tiers. Atrium is assigned to the most expensive “non-preferred” tier.
Sept. 14: Atrium and the plan announce a new agreement that moves rural Atrium hospitals and its children’s hospitals to the middle “access” tier.
Oct. 6: Atrium announces its “affordability protection program” to reduce state employees’ out-of-pocket costs. Briner responds that the move will bankrupt the State Health Plan.
Oct. 9: Briner goes to court seeking to block Atrium’s program.
Oct. 13: A judge denies Briner’s request.
Oct. 14: Briner announces most Atrium providers will become out of network, a rate even more expensive than the “non-preferred” tier.
Oct. 26: The current deal is announced. Atrium agrees to lower rates, and all of its hospitals and doctors move to the plan’s middle “access” tier.
Size matters
As hospitals have rapidly consolidated in recent years and insurance companies merge, pricing power has shifted and they’ve been able to set the rates. Most employers and individuals have ended up having to take what they can get, pricewise, in a market dominated by giants.
With about 750,000 members, the State Health Plan is different. As an employer group with real heft, Briner has had leverage to go toe-to-toe with the big players and demand better terms.
Former Treasurer Dale Folwell frequently cited the State Health Plan’s size as a reason he should be able to negotiate better terms from the state’s hospitals and insurers, and he tried unsuccessfully to force all of the state’s hospitals to take lower payments tied to Medicare rates. He made a name for himself taking on the hospitals, calling them “cartels” and censuring them for high prices and lack of transparency. Folwell was also bitterly critical of Blue Cross Blue Shield of North Carolina, which he called out for a lack of transparency in their contracts.
A pricing plan championed by Folwell only ended up generating more deficits.
By the time Briner took over in 2025, the plan was facing a $507 million deficit, which was projected to grow to $1.3 billion by 2027 without changes.
Asked what made his approach different from Folwell’s, Briner responded, “Divide and conquer. You can’t take them all on at once.”
Friedman said the State Health Plan also has “soft power,” in addition to the large expenditures the plan makes.
“These systems do really want to work with state employees,” he said. “They view that as a badge of honor.”
Future investment
The State Health Plan contracts that sort the hospitals into tiers will last for three years, with optional one-year extensions for two more years. Briner said he hopes to use the savings generated by the current plan to do something he said the plan hasn’t had the resources to do: invest in keeping people healthy.
For decades, health economists and policy wonks have said that one way the U.S. health care system could save money is if, as a society, it invested more in keeping people healthy up front, rather than paying for care once people get sick.
The roadblock, though, has been the way most people in the U.S. get their insurance coverage: through their jobs. On average, older American adults have changed jobs almost 13 times by the time they retire, according to the federal Bureau of Labor Statistics. Younger “millennial” workers change jobs an average of nine times between the ages of 18 and 36, according to a 2024 report from the agency.
That means companies have little incentive to pay for preventive services for a worker who’ll move on to another company that will reap the benefit of that investment.
Friedman said worker longevity makes workers covered by the State Health Plan different.
“Generally speaking, teachers teach, corrections officers remain corrections officers, police officers remain police officers, our retirees stay on the plan,” he said. “You can feel more confident making a long-term investment in state employees and teachers.”
Making that up-front investment means the State Health Plan can reap the benefit of healthier workers who cost less down the road, even as they get to an age where people tend to get sick.
“That’s why we need to think about these long-term partnerships, not just as a price reset but now how do we move the structure towards investing in the health of those folks, because they are going to be in the plan for a long time,” Friedman said.
This article is part of a partnership between The Charlotte Ledger and North Carolina Health News to produce original health care reporting. You can support this effort with a tax-deductible donation.
Republish our articles for free, online or in print, under a Creative Commons license.
