By Michelle Crouch
What if your health plan offered free surgery, but only by surgeons on its approved list?
That’s the incentive behind a new program the North Carolina State Health Plan is rolling out for more than 700,000 teachers, state workers and their families.
The plan connects members needing certain procedures with a select network of vetted surgeons and hospitals. Last week, officials announced that Novant Health will join OrthoCarolina in the program, expanding its reach to more of the state.
The plan is also in talks with Triangle area providers, with results expected to be announced soon, a spokeswoman said.
Health policy experts said the approach, called direct-to-employer health care, is becoming more common as employers look for ways to steer their workers to high-quality care and rein in rapidly rising health care costs.
The State Health Plan’s new initiative is run through Lantern, one of several specialty care platforms nationwide helping employers launch and manage these types of programs.
The models are still relatively new, so it’s not clear how much money they will ultimately be able to save — or how willing patients will be to travel or switch doctors to get the lower prices. State Health Plan members don’t have to use the selected surgeons, but skipping the Lantern-vetted surgeons would cost them more.
“We aren’t taking away choice. We are creating an incentive,” said State Treasurer Brad Briner, whose office administers the plan.
Briner said the goal is a rare “win-win-win”: The surgeons get more patients, the employees get free surgeries and the state lowers its health care costs.
“Everyone is getting something out of it,” he said.
A way to control surging costs
The State Health Plan has faced mounting financial pressure in recent years as its health care costs climbed. At one point, the plan was projected to run a deficit of about $500 million this year and $900 million next year.
State officials have since taken steps to stabilize the program — including raising premiums, increasing deductibles and launching new cost-control initiatives. The new surgery program is its latest effort.
Surgical procedures account for 15 percent to 30 percent of the State Health Plan’s total spending, administrators said.
Lantern promises to bring those costs down by contracting with selected surgeons and facilities that agree to perform procedures at lower, pre-negotiated prices.
Based in Dallas, Lantern works with more than 1,000 employers — with 12 million insured parties nationwide — including 7-Eleven, Hyatt Hotels and the state of Florida, as well as window manufacturer JELD-WEN and property manager Greystar in North Carolina.
Lantern requires the surgeons in its network to meet quality standards, such as performing a minimum number of the procedure each year and meeting safety benchmarks from independent agencies such as The Leapfrog Group, said Lantern President Dickon Waterfield.
“If we can steer patients to high-quality surgeons at a lower price, everyone benefits,” he said.
Providers agree to the discounts in return for a steady stream of patients, he added.
The math behind the savings
Nationwide, prices for the same operation can vary dramatically — sometimes costing up to 13 times more at one facility than at another, and large consolidated hospital systems are typically the most expensive. Yet studies show no clear link between higher prices and higher quality.
Briner said Lantern has negotiated average savings of 25 percent to 35 percent on the covered procedures — from cardiac surgeries to joint replacements — for the State Health Plan.
To illustrate how the math works, he said, take a hypothetical $50,000 surgery. If the State Health Plan gets a 30 percent discount, the price drops to $35,000. Even when it pays the $5,000 that a plan member would typically pay out of pocket for a surgery, the state still saves $10,000 from that one procedure, he said.
“We do that over and over again, and now we’re talking about real money,” he said.
Using higher-quality surgeons should also lower the risk of complications and expensive follow-up hospitalizations, which would mean further savings.
Employers searching for solutions
For years, employers have relied on traditional insurance networks to manage their workers’ health care. But double-digit cost and premium increases in recent years have prompted more experimentation with new strategies, said Shawn Gremminger, president and CEO of the National Alliance of Healthcare Purchaser Coalitions.
In the coalition’s 2025 survey, 65 percent of employers with more than 50,000 workers said they were using “centers of excellence” programs that steer patients to selected providers for certain procedures. Nearly half said they were redirecting patients to lower-cost sites of care, and 44 percent reported contracting directly with high-value hospitals.
“The promise is that you will be getting better prices and better quality,” Gremminger said. “The reason these models are taking off is that they potentially help achieve both of those aims.”
Andrew Ryan, a health policy researcher at Brown University, said Lantern and other third-party platforms have an advantage because they operate outside the traditional insurance system, where consolidated hospital systems hold significant leverage.
When insurers have made similar efforts to steer patients to lower-cost providers, he said, hospitals have always pushed back, threatening to pull their facilities out of the insurer’s network.
Lantern bypasses that problem by allowing employers to contract directly with selected providers, said Ryan, who directs the Center for Advancing Health Policy through Research at Brown University.
“It’s completely plausible that this can save money,” he said, adding that the biggest opponents to the program will likely be hospitals and insurance networks “that have jacked up prices through their anti-competitive practices.
“They hate having patients steered away from them,” he said.
Surgeons embrace the model
Leo Spector, chief executive officer of OrthoCarolina, said the practice signed on because the program makes it easy for patients to get surgeries without worrying about copays and deductibles — out-of-pocket costs that can often be a disincentive to getting the procedure done.
The program also gives OrthoCarolina access to a greater pool of patients. And by bundling surgeries into a single payment, it streamlines billing and insurance approvals, he said.
Spector said such arrangements are gaining traction as employers look for alternatives to traditional insurance networks.
“It’s a disruptor in the market,” he said. “And I think disruptors are good because they create competition. It’s going to force the traditional payers to get better at what they do and help us ultimately lower that cost of care.”
Novant Health declined to make anyone available for an interview, but during a March 4 news conference, Novant Chief Medical Officer Pam Oliver said, “We’ve seen firsthand how these models can deliver the caliber of care patients deserve, while alleviating financial concerns. In fact, we have similar approaches for our team members.”
How it works for state employees
Since Lantern’s soft launch last fall with the two orthopedic practices, about 378 State Health Plan members have used the program, Lantern said. Hundreds more are scheduled for surgery over the next few months.
When State Health Plan members need one of the covered procedures, they’re directed to contact Lantern, which assigns them a navigator to help coordinate their care, Waterfield said.
The navigator gathers their medical records, identifies surgeons in Lantern’s network who specialize in the procedure and schedules appointments. Patients are typically given the names of several providers and can choose the one they prefer.
If the nearest participating surgeon is far away, the plan covers travel costs for the patient and a companion. Depending on the distance, the benefit can include mileage reimbursement, hotel stays and other expenses.
Suzanne Beasley, director of government relations for the State Employees Association of North Carolina, said the group has been spreading the word about the program to its members, though it’s too soon to know how it’s working.
“It certainly sounds great,” she said. “If folks can get good, well-vetted care at no cost, that certainly could help offset some of the rising costs. Health care is broken, period. We have to start thinking outside the box.”
This article is part of a partnership between The Charlotte Ledger and North Carolina Health News to produce original health care reporting. You can support this effort with a tax-deductible donation.
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