WINDSOR – Battle lines are drawn as Vidant Health officials attempt to protect their operating margins that are under attack from the North Carolina Treasurer who is facing the task of saving the state’s medical insurance plan that is struggling to keep its head above water.

In the most recent news from State Treasurer Dale R. Folwell, he cites a Nov. 28 report from S&P Global that confirms previous research by the Pew Charitable Trusts which explains that the state’s unfunded retirement/health care costs as a share of personal income are one of the worst in the country, right behind Illinois.

Folwell stressed that North Carolina spends more than $3.4 billion annually on health care for active and retired state and local government employees. He added that medical and pharmaceutical costs are increasing five to nine percent annually and current spending projections estimate that the state’s plan for its employees and retirees will be insolvent by 2023 unless action is taken.

“This new report underscores our immediate need to get medical and pharmaceutical costs for the State Health Plan

under control,” said Folwell. “Every man, woman and child in the state would have to pay almost $3,200 each to cover our current promises of health care for state and local government retirees. We’re having to act because others haven’t.”

Folwell is pitching a plan that proposes to restructure how the state’s medical insurance plan, which covers over 725,000 workers and their dependents as well as state retirees, pays medical providers. He boasts that his plan will lead to $300 million in savings for North Carolina taxpayers as well as an additional $65 million in annual insurance premiums paid by state workers enrolled in the plan.

His plan is basically patterned after what Medicare reimburses medical providers for services rendered.

In a statement, Folwell said, “My responsibility as the treasurer is to make sure the state is paying what it is supposed to pay for healthcare on behalf of our employees and taxpayers.”

But to pull that off, medical providers across the state, to include Vidant Health here in eastern North Carolina, will see a reduction in the payments they receive for providing those services to state workers.

Vidant Health CEO Michael Waldrum, speaking during a Dec. 11 interview held at Vidant Bertie Hospital in Windsor, said the state treasurer’s payment methodology to doctors and hospitals relates to, “very significant cuts in reimbursement,” and, “that hits rural communities the hardest.”

For Vidant Health alone, those annual cuts are in the $40 million range.

He added he had spoken one-on-one with Folwell in an effort to send a message of there was a better way to solve this situation.

Waldrum said what Folwell isn’t taking into consideration is what Vidant Health invests within the communities it serves.

“We are part of the community in Ahoskie, Windsor, Edenton….all the areas we are in,” Waldrum noted. “When you cut us, you cut our communities as a whole. We don’t just take care of our communities from a medical standpoint, we are also economic drivers in those communities. His (Folwell’s) actions threaten that.”

As a scenario to the treasurer’s proposal, Waldrum said one of the services that could be impacted the most was child delivery.

“The largest (payment) cut he is proposing is the reimbursement made to doctors who deliver babies,” Waldrum observed. “Where are those expectant mothers going to go? Are they going to ride one hour away, while in heavy labor, to give birth to their child?

“And what does that do to our recruitment and retention of doctors,” he added. “It’s already tough to recruit good doctors to rural areas. If we are saddled with these cuts, that task becomes nearly impossible.”

Waldrum stressed that Folwell, as an elected official, has a responsibility to all citizens of North Carolina, not just those on the state’s payroll.

“We have the legal obligation to provide medical are to anybody that shows up at our door,” Waldrum remarked. “When I mentioned that to Mr. Folwell, his reply was, ‘well they only show up at the emergency room.’ I take offense to that. I told him that’s where sick people go. I feel he has a very negative, highly inflammatory rhetoric that he promotes about how we do things.”

As to Vidant’s $40 million loss in reimbursements from the state’s health plan, Waldrum said that only leaves an approximate $12.5 million in annual operating margin (based on current numbers); money that is reinvested in all Vidant communities stretched across 29 counties.

“This plan is a significant threat to us. It has the potential to lead us to look at ways to drastically reduce the medical services we offer, which, in turn, severely limits the critical care we provide for thousands upon thousands of patients we serve here in eastern North Carolina,” Waldrum stressed. “And among those we serve are state employees.”

Waldrum said he reached out to Folwell in an effort for the state treasurer to provide information on how his plan works.

“This is what I received, a document of the state’s plan to control health care costs,” Waldrum stated, reaching to pick up an eight-inch high stack of papers that were all heavily redacted. “He likes to talk about transparency, but then we receive documents like this from his office.

“We feel like the taxpayers of this state need transparency about the state health plan and how it’s being managed,” Waldrum added.

He held up another nearly blank sheet of paper, representing a response from Folwell when asked to show how much taxpayer money is paid by the state to Blue Cross Blue Shield to administer the state’s health plan. The top of the sheet reads, “This document is fully redacted.”

“They’ve been doing this with Blue Cross for over 30 years; who knows how much taxpayer money is paid to Blue Cross for this,” Waldrum quizzed. “Apparently this isn’t public record.”

He also pointed to a 2018 study released by the American Medical Association – “Competition in Health Insurance” – and noted it placed North Carolina as one of the top 10 least competitive health insurance markets in the United States.

“We’re the most populated state in this top 10, meaning this affects more people,” Waldrum asserts.

He stressed that Folwell’s plan disproportionately places disadvantaged, struggling rural areas in the treasurer’s crosshairs.

“That’s eastern North Carolina,” Waldrum emphasized.

When asked if he thought Folwell would consider other options, Waldrum replied that he didn’t feel the state treasurer was willing to reach a compromise.

“His (Folwell) way – using a broad brush and a hatchet – will not work to solve this problem. I’ve discussed this with our state legislators, they need to be watching this situation; the viability of the communities they represent is at stake here,” Waldrum said. “We’ve seen all too often across our nation what happens to rural communities when they lose their hospitals. It affects the whole community.

“We’ve already shown to the federal government through Medicare that we know how to take care of people and manage their health issues at a higher quality with lower costs,” Waldrum concluded.

Also attending the Dec. 11 interview were Judy Bruno, the newly named president of Vidant Roanoke-Chowan Hospital, and Brian Harvill, president of Vidant Bertie Hospital.

“This will have a far-reaching ramifications on our hospital, particularly in the area of recruitment of medical staff,” Bruno said. “When I think of the impact this will have on our community and our (hospital) staff, I see community members threatened medically due to loss of services and see the livelihood of our staff threatened.”

Harvill agreed, saying, “Vidant Bertie on its own cannot sustain itself year after year on the margins that we make, so we have to rely on the system (Vidant Health). So if the system takes a hit with losing services and jobs, then we take a hit here locally. In turn, we lose our mission to provide quality healthcare.”