RALEIGH, North Carolina — North Carolina's State Health Plan and Atrium Health have signed a new multiyear contract that puts every Atrium hospital and physician back in network for the plan's nearly 750,000 members, ending a public standoff that had threatened to push one of the state's largest hospital systems out of network on January 1, 2027, in the middle of open enrollment. State Treasurer Brad Briner, who chairs the State Health Plan Board of Trustees, announced the deal at the board's meeting on Tuesday, October 27, in Raleigh.
Source: NC Treasurer / State Health Plan, Oct. 27
Under the contract, the plan will add all remaining Atrium Health hospitals and physicians to its in-network “access” tier, the middle tier of the plan's new tiered-provider structure that takes effect on January 1, 2027. Members who rely on Atrium will have in-network access-tier coverage for all currently existing Atrium hospitals and specialty care services, and they can use that certainty to finish choosing their 2027 coverage before open enrollment ends on November 6, the Treasurer's office said.
Source: NC Treasurer / State Health Plan, Oct. 27
What each side gave up
The deal trades away the two weapons the sides had pointed at each other this month. Atrium will sunset its Affordability Protection Program — the program it announced on October 6, less than a week before open enrollment began on October 12, promising the lowest copays and cost-sharing at Atrium facilities — because, in the plan's words, it “is no longer needed.” In return, the State Health Plan will withdraw the legal complaint it filed against Atrium over that program, according to the joint announcement reported by EdNC.
Source: EdNC, Oct. 27
“Thank you to our hundreds of thousands of members who have trusted us and trusted the process to bring you the high-quality care you want at costs we can all afford,” Briner said in the Treasurer's release. “We know there has been a lot of confusion for our members right now as we are in the middle of Open Enrollment. We hope this agreement provides members with more clarity about provider tiers and puts concerns to rest while avoiding drastic premium and benefit changes statewide.”
Source: NC Treasurer / State Health Plan, Oct. 27
Steve Smoot, president of Advocate Health's North Carolina and Georgia Division, which includes Atrium Health, said the agreement is “about providing the peace of mind that comes from knowing the caregivers they trust will remain within reach,” in a statement carried by The Center Square. “We are grateful to move forward together with a shared commitment to making high-quality care more accessible and affordable for every State Health Plan member who depends on us,” he said.
Source: The Center Square
How the fight reached the courthouse
The background is a plan in deep financial trouble trying to force down what it pays hospitals. The State Health Plan covers educators, charter school and community college employees, other state employees, retirees and their dependents — nearly 750,000 people in all. When Briner took office in January 2025, the plan faced a deficit put at $507 million, and its lawsuit this month cited projections of a $500 million deficit this year and $1 billion in 2027. To dig out, the plan built a tiered network for 2027 that rewards members with lower deductibles and out-of-pocket costs when they use “preferred” providers that accepted significantly lower rates: UNC Health, Novant Health, Iredell Health System and about 4,500 independent providers.
Source: EdNC, Oct. 27
Atrium was not chosen as a preferred provider, so its hospitals were designated “non-preferred” — members who kept their Atrium doctors faced higher copays and deductibles, a hard sell in Charlotte, where Atrium has long held roughly half the care market. Atrium answered on October 6 with its Affordability Protection Program, offering members the lowest costs at Atrium facilities. Briner called the program a scheme that could cost taxpayers and members hundreds of millions of dollars and said it could bankrupt the plan. The plan asked Wake County Superior Court for a temporary restraining order on October 9; a court denied its request for a temporary injunction on October 13; and on October 14 the plan announced Atrium would be moved out of network beginning January 1, 2027, except for select facilities already designated “access” under a September agreement. Tuesday's contract reverses that threat.
Source: EdNC, Oct. 27
The money problem has not gone away
The same board meeting that produced the Atrium deal also laid bare why the plan is restructuring at all. A financial report showed losses accelerated from July through September 2026, draining cash faster than projected, and the plan warned that “if current trends continue, the Plan could run out of cash by the end of 2026.” Board members approved temporarily doubling the Retiree Health Benefit Fund contribution from $300 to $600 per retiree per month for July through December 2026 — an adjustment worth $400 million, drawn from a fund Briner said holds about $4.5 billion — with an approved amendment to repay the amount with interest. The 2027 tiering system, premiums and benefit changes are expected to produce a slight cash gain next year, Becker's reported, but officials said more action will still be needed to rebuild reserves.
Source: Becker's Payer Issues
“Today's discussion underscores the serious financial pressures facing the Plan and why the changes being implemented in 2027 are necessary as we work to protect the Plan's ability to pay members' claims,” Briner said. Executive Administrator Tom Friedman told the board the cost of care “went up faster than I think anyone could have anticipated,” and warned: “If we stay on the status quo, we will be bankrupt, very, very literally.” Friedman argued the plan must “tackle the cost of healthcare and not purely treat this as a revenue problem,” including paying differently for primary care, especially in rural communities.
Source: EdNC, Oct. 27
Open enrollment for coverage starting January 1, 2027 runs through November 6 — extended by one week from the original October 30 close because of the dispute. Members are enrolled by default in the standard PPO plan and can opt into the plus plan, which has cheaper copays but a higher monthly premium; about 60,000 members had moved into the plus plan by Tuesday, fewer than in previous years. With Atrium now confirmed in the access tier, members can check their own doctors and hospitals against the final 2027 tiers before the deadline.
Why it matters beyond North Carolina
For the Punjabi diaspora and other immigrant families working in U.S. public schools, state agencies and community colleges — including in North Carolina's growing Indian-American communities around Raleigh, Charlotte and the Research Triangle — the State Health Plan is often the family's main health coverage, and a hospital system dropping out of network can mean changing doctors mid-treatment or paying far more out of pocket. The deal removes that immediate risk for Atrium patients, but the plan's own warning stands: premiums, tiers and benefits are being reset for 2027 precisely because the fund came close to running out of cash, so members everywhere in the plan should read their 2027 options rather than rolling over last year's choice by default.
Source: Becker's Payer Issues
A population-health study presented at the same meeting underlines the cost pressure: members with chronic conditions accounted for 63% of the plan's medical costs in 2025, mental-health prevalence among members rose from 37.6% in 2022 to 44.1% in 2025, and emergency-room visits per 1,000 members run about 26% higher in rural counties, where urgent-care use is about 17% lower — gaps officials tied to lack of access. Separately, Atrium is seeking to merge with Raleigh-based WakeMed, a combination that still needs federal and regulatory approvals, The Center Square noted.
Source: The Center Square
What happens next
Open enrollment closes November 6, and the new tiered network — with Atrium in the access tier and its affordability program wound down — takes effect January 1, 2027. The plan's lawsuit against Atrium is being withdrawn. Looking further ahead, the board is taking a “more measured approach” to 2028 benefit changes because Blue Cross and Blue Shield of North Carolina will replace Aetna as the plan's third-party administrator on January 1, 2028; a deeper discussion is scheduled for the board's January meeting, with a vote in March. Whether the $400 million bridge and the new tiers actually restore the plan's cash position will be tested in the financial reports that follow.
Source: EdNC, Oct. 27