Atrium Health scored an early courtroom win on Tuesday when a judge rejected the state of North Carolina’s request for a temporary restraining order on an affordability program the health system plans to implement for State Health Plan members in the 2027 calendar year.
The Atrium Health Affordability Protection Program, unveiled last week, would lower members’ out-of-pocket costs but, according to the State Treasurer of North Carolina’s office, effectively shift those costs back to the plan.
Notably, the cost sharing would make Atrium’s facilities more appealing to plan members than other health systems in the state with lower rates. The office had recently implemented a Preferred Provider Program, authorized under state statute, that reduced members’ copays if they received care from the lower-cost providers.
Atrium, which only had some of its services and locations designated as a preferred provider, announced its Affordability Protection Program bringing copays even lower than those in the state’s Preferred Provider Program “to deceive Plan participants into believing” that its services were lower cost, the state wrote in a complaint filed last Friday. In reality, the state said, Atrium’s program would “maintain higher reimbursement rates … without reducing the overall cost of services, particularly for high-cost services and very sick patients who use a significant number of services.”
The treasurer in recent weeks has described Atrium’s program as unlawful and a “shell game” that would bankrupt the plan. The state also alleged in its complaint that Atrium acted in bad faith by waiting until just days before the 750,000-member plan’s open enrollment period to sow confusion among plan members and “undermine” the state’s program.
Atrium has described its program as addressing “any remaining affordability gap” for plan members and a response to cost concern feedback from clinicians and other community members—and noted in its announcement that the Affordability Protection Program “is not affiliated with, authorized by or endorsed by the NC State Treasurer, the NC State Health Plan or the State of North Carolina.
After hearing arguments surrounding the temporary restraining order request, Judge Matthew Houston denied the state’s request from the bench, allowing Atrium’s program to go into effect during the upcoming Open Enrollment period and 2027 plan year.
"We're pleased by the court’s ruling to deny the temporary injunction," Steve Smoot, president of Atrium parent company Advocate Health's North Carolina and Georgia Division, where Atrium is located, said in a Tuesday statement. "From the very start, this has been about the people we serve: the more than 80,000 teachers, first responders, state employees and their families, from across North Carolina, who trust Atrium Health with their care. Thousands of State Health Plan members have told us they didn't want to choose between paying more and leaving the physicians and care teams who have walked with them through some of life's most serious health challenges."
The treasurer’s office, in its own statement, said that “while this is not the outcome we were hoping for, … the judge did acknowledge our argument that the Program could cause irreparable harm to the Plan.”
The State Health Plan said it’s still exploring “other legal pathways,” but is also weighing how best to maintain solvency through 2027 and beyond. That could include raising premiums for all of its members by $50 per month in 2028, it said.
“The State Health Plan is funded by member and taxpayer dollars, and those resources are finite,” Treasurer Brad Briner said in a statement. “When a single provider can manipulate the Plan’s cost structure, dictate how benefits are designed or undermine our tiered network, it won’t just be disruptive—it could be catastrophic for the Plan, its members and taxpayers.”
Atrium, in its statement, said that the office’s suggestions of a premium increase haven’t been detailed, and would be “the result of the Plan’s own flawed design.” It also again contested the state’s characterization of its rates as high cost, and pointed to a September statement from the Plan that called Atrium “no more expensive than other leading systems in North Carolina” prior to the launch of its Preferred Provider tiering.
The legal conflict had been simmering for months. Atrium said over the summer that it “was never engaged to compete for the full scope of services included in the program,” designations for which it first learned of through media reports. The treasurer’s office and the plan responded by likening Atrium’s statement to “a World Cup team that loses and immediately blames the referee.” The sides appeared to have made progress in ongoing talks by September, but Atrium ultimately moved to launch its Affordability Protection Program on Oct. 6.
Atrium, on Tuesday, said that it maintains an offer to the plan to match—rather than undercut—the preferred provider tier discounts to receive the designation.
"We share the State Health Plan's goal of staying strong for the next generation of public servants," Smoot said. "Our offer to match the Preferred Tier discounts and designation is still on the table, and it would save the Plan money. We remain ready to sit down and find a path forward together, for every member the Plan serves."