Analysis: Deadline passes for NC state employee Medicare reference pricing contract

• July 1 was the deadline for providers to sign North Carolina’s Clear Pricing Project contract for state employees.
• While approximately 15,000 providers have signed the contract, the Winston Salem Journal is reporting that only three hospitals agreed to the contract. 

July 1 was the deadline for providers to sign North Carolina’s Clear Pricing Project (CPP) contract for state employees. Modern Healthcare is reporting the contract would pay hospitals on average 182% of Medicare for inpatient and outpatient services. Physicians reimbursement would be approximately 160% of Medicare.

While approximately 15,000 providers have signed on to participate, the Winston Salem Journal is reporting that only three hospitals agreed to the contract. 

Despite the July 1 deadline, the North Carolina State Health Plan’s (SHP) current contracts are valid through the end of the year.

The SHP is largest single purchaser of healthcare in the state covering 720,000 individuals with a total spend of $3.2 billion.

Takeaway

Montana is the only state to have done something similar. It was able to push its contract through, in part, by using some of the savings to support Medicaid expansion and limiting the contract to only urban hospitals.

Also, while Montana’s contract is frequently held up as “reference pricing” based on conversations with hospitals in the state, it sounds less like a standard contract based on Medicare rates for inpatient and outpatient services. Instead, it sounds more like a comparison of current commercial payment rates for state employees to the hospital’s Medicare rate to negotiate pricing concessions.

North Carolina’s hospitals have reacted to the CPP with frustration. Despite being home to over 30 Medicare and six commercial-only ACOs, the state treasurer elected to simply cut rates.

Therefore, the contract is “value-based” only in the sense that it reduces the denominator in the value equation. It does nothing to align incentives between providers, support care redesign efforts or reward them for improving outcomes and the patient experience of care.