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In New Jersey, Horizon's Big Reach for Value-Based Care Runs Into Political Reality

Mary K. Caffrey
An initiative by Horizon Blue Cross Blue Shield of New Jersey to implement integrated, value-based care on a wide scale has run into criticism from legislators who say it will bring financial harm to some safety net hospitals. A Senate hearing today concluded with a call for an investigation from the Attorney General into how the alliance was created.
If the state’s largest insurer created a plan that promised lower costs for consumers and employers, technology investments, and better healthcare quality, everyone would be happy, right?


That’s been the lesson for Horizon Blue Cross Blue Shield of New Jersey, which stunned the healthcare community last month when it unveiled its OMNIA tiered network plan. It’s the boldest attempt yet to move a state with some of the nation’s highest healthcare costs away from volume-based to value-based delivery. But OMNIA’s scope, and its potential to reshape the New Jersey market, has revealed a challenge of putting healthcare reform theory into practice: as healthcare experts and legislators alike have observed, rewarding quality will inevitably create “winners and losers.” In New Jersey at least, those who feel left out aren’t going down quietly.

For consumers, the plan offers lower premiums and out-of-pocket costs, in exchange for staying within a network of selected hospitals and physicians. Providers in the OMNIA partnership have agreed to lower payments in exchange for having patients directed their way. Unlike conventional narrow network plans, OMNIA doesn’t bar enrollees from venturing outside the network, known as Tier 1, but doing so will increase out-of-pocket costs. Who Horizon included in the alliance and how providers were picked has created an uproar, in part because so many details remain under wraps. Because it has 3.8 million members and an outsized share of the market, Horizon’s move could spell financial doom for those not in the network, critics charge.

Today, Horizon officials were grilled for more than 4 hours at a joint hearing of Senate committees that handle insurance regulation and health policy, amid calls to shelve OMNIA until more is known about how the plan was created. The hearing ended with the committee chairs calling for an investigation by New Jersey's attorney general into how the alliance took shape.
“Our hearing revealed that Horizon misrepresented to the public and legislators the makeup of the widely publicized OMNIA Alliance and failed to disclose all participating providers within the tiered system. In addition, the Department of Banking and Insurance may have violated state law and its own regulations by approving the tiered plans even though they did not meet the established requirements" Senators Nia Gill and Joseph Vitale, both Democrats, said in a statement.

For Horizon, OMNIA is a response to the national movement toward alternate payment models and more focus on preventive care. “Patient-centered care is not a novelty,” said Robert A. Marino, CEO of Horizon, in his testimony this morning. “The Affordable Care Act, President Obama, and states across the nation have pushed for this change.”

While some criticize Horizon, others fault state regulators for approving the plan in the first place. But OMNIA has shown that state laws, which look at each insurer or plan in isolation, may be inadequate to manage a marketplace undergoing dynamic change since the passage of the ACA. Rather than controlling healthcare policy, regulators suddenly found Horizon making policy for them. At its best, OMNIA could be a model for Blues in other high-cost states; at worst, OMNIA could speed the financial spiral of some safety-net institutions. Those concerns were on display today, especially among legislators from urban areas.

“It’s pretty apparent your definition of value is discriminatory,” said Senator Ray Lesniak, a Democrat from Elizabeth, whose city hospitals were left out of the alliance.

“We have a responsibility to say for all our state’s hospitals or all our states consumers, what will this mean to them?’’ said  Vitale, who chairs the health committee and has overseen legislation to bring financial resources to safety net hospitals. “It wouldn’t matter if you were some obscure insurance company. It matters when Horizon does something.”

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