The North Carolina State Health Plan Board of Trustees approved a shift to a four-tier provider network for 2027, aimed at lowering costs by steering members toward preferred providers.

Preferred-provider contracts were awarded to Novant Health, UNC Health, and Iredell Health Systems, while other major systems are still negotiating or designated as non-preferred, affecting where members are steered for care.

The board is negotiating with Duke Health and WakeMed on the final tiered network and is set to decide on a new third-party administrator and pharmacy benefits manager.

The initiative targets improved finances after projected deficits, adopting a turnaround-like strategy that leverages plan strengths and stronger provider engagement.

Executive Administrator Thomas Friedman said the goal is to save members money over time and rebuild reserves, even with the premium increase.

Premiums will rise about 5% in 2027, with retirees’ Medicare Advantage premiums staying flat.

Out-of-pocket costs are projected to be lower than 2011-2012 levels, with spend at the point of care helping fund reserves and keep premium costs in check.

The reform follows a history of deficits and state budget support, part of a broader plan to stabilize and modernize the State Health Plan while balancing costs for employers and members.

Members will be notified about changes, though communications may take time as the transition unfolds.

The plan will return to BCBSNC as administrator and CVS Caremark as PBM, a switch expected to yield nearly $1 billion in savings over the contract term.

By strengthening bargaining power and steering members to preferred providers, the plan aims to reduce costs and potentially save high-use members thousands of dollars.

State officials and advocates stress inflation-adjusted savings with preferred providers, highlighting potential substantial benefits for participating members.