North Carolina's State Health Plan moved most Atrium Health facilities to its out-of-network tier, a change that takes effect Jan. 1, 2027.

The reclassification directly affects state employees in the Waxhaws area. Atrium Health Union in Monroe, the Atrium Health Waxhaw Emergency Department and Atrium Health Union West in Matthews all fall under the Atrium system. Union County Public Schools employs approximately 5,000 staff members, according to the district's website.

State Treasurer Brad Briner, who chairs the State Health Plan Board of Trustees, said the move protects the plan from what he called a $250 million cost threat in 2027.

Atrium had announced a new "Affordability Protection Program" on Oct. 6 that would lower copays and waive deductibles for State Health Plan members at its facilities. But Briner and other plan officials said Atrium was only lowering costs for patients while still charging the plan higher rates.

"I will not let one hospital system destroy the Plan, raise premiums on every teacher and state employee and send us into overwhelming debt," Briner said in a State Health Plan press release.

The dispute centers on a tiered provider system the Board of Trustees approved in July. UNC Health and Novant Health agreed to lower their rates and earned "preferred" status. Atrium was placed in the "non-preferred" tier, meaning members would pay higher copays and out-of-pocket costs to use its facilities.

Atrium responded with its affordability program, which the State Health Plan called an "unlawful pricing scheme" in a lawsuit filed in Wake County Superior Court. A judge denied the plan's request for a temporary restraining order on Oct. 13, Carolina Journal reported.

Atrium noted the court found the plan was unlikely to succeed on the merits of its case. Steve Smoot, president of Advocate Health's North Carolina and Georgia Division, which includes Atrium, said the program is about the more than 80,000 teachers, first responders and state employees who use Atrium facilities statewide, according to an AOL/CBS 17 report.

After the ruling, the State Health Plan moved most Atrium facilities from non-preferred to out-of-network. That shift means the plan has "little to no financial responsibility" to Atrium, according to the press release.

Tom Friedman, executive administrator of the State Health Plan, said other hospital systems including UNC Health, Novant Health and Duke Health provided deeper discounts. He said if Atrium's program were allowed to continue, the plan could be forced to raise premiums on all members, WRAL reported.

Not all Atrium facilities are affected. Twelve children's and rural hospitals, including Levine Children's Hospital in Charlotte, will remain in the plan's "Access Tier" with costs largely kept at 2026 levels.

Emergency room copays stay at Access Tier rates regardless of a hospital's network tier. Primary care copays, behavioral health, urgent care and physical therapy are also not affected by the new tiers, according to the State Health Plan.

Open enrollment runs through Friday, Nov. 6. Plan members can visit shpnc.gov for details on the new tier structure.