Rate Increases Approved for Medicare Advantage Plans in North Carolina

The North Carolina State Health Plan Board of Trustees has approved rate increases for its Medicare Advantage plans, impacting older employees and retirees. This decision, made at their recent board meeting, opens discussions about a new tiered provider system aimed at enhancing plan sustainability.

The Humana Medicare Advantage Plans currently serve nearly 177,000 members. The rate hikes are projected to save approximately $54 million, nearly compensating for an anticipated $58 million shortfall by 2027. Tom Friedman, executive administrator of the State Health Plan (SHP), recognizes the potential for dissatisfaction but underscores the necessity for financial health.

State Treasurer Brad Briner, overseeing the SHP, cited rising medical costs as a critical challenge. The rate increase is deemed essential for sustaining the plan. Out-of-pocket maximums will rise, with Base Plan limits increasing to $4,500 and Enhanced Plan limits to $3,700. Additionally, the Part B Drug Co-pay will transition from $0 to $50, a notable cost driver according to Friedman.

Concerns regarding the impact on retirees with fixed incomes were voiced, with representatives from the North Carolina Retired Governmental Employees Association highlighting existing financial burdens due to absent cost-of-living adjustments. Changes to the Medicare Advantage Plans will be effective January 1, 2027, with new tiered provider strategies being proposed for broader member categories.

The board managed to mitigate an anticipated $1.3 billion deficit for 2027, positioning the plan $30 million above its reserve rate. By directing members towards preferred providers, the tier system is expected to reduce out-of-pocket spending by a third, balancing savings and care accessibility.

Commitment to ensure rural providers are included remains strong, with 194 providers currently within the framework. Emerging contract negotiations and strategic decisions concerning 2027 premium rates and third-party administrators are scheduled for review at the July 10 meeting.

The board has adopted a strategic plan for 2026-2032, focusing on affordable premiums, stable benefits, improved member health outcomes, and access to care. These measures aim to solidify the plan's financial stability in the long term.