Two separate lawsuits have challenged the health insurance plan, which seeks to give some hospitals lower reimbursements in exchange for directing large numbers of patients their way. After business hours, the attorney for a group of hospitals said regulators declined to stay their approval of the tiered network.
An effort by Horizon Blue Cross Blue Shield of New Jersey to introduce population health on a widespread basis could redirect expectant mothers away from 2 of the state's busiest maternity units, including one that has received national recognition for caring for some of the most fragile newborns.
As Horizon faces 2 separate legal challenges to OMNIA, the tiered network formed to implement its cost-cutting initiative, state regulators weighed whether they would reverse their approval. Today was the deadline for the NJ Department of Banking and Insurance (DOBI) to respond to a lawsuit from 17 hospitals left out of the preferred tier, known as Tier 1. At the close of business, Steven M. Goldman, attorney for the hosptials and a former DOBI commissioner, reported that the department had denied a stay of its approval.
“Today’s decision by DOBI is disappointing but not surprising. We intend to continue to pursue a stay of DOBI’s decision in the appellate division and correct what our clients believe to be a flawed process and network,” Goldman said in a statement.
Horizon’s effort has drawn attention at managed care meetings nationwide, as resistance to OMNIA has grown. While the attempt to expand value-based care initially attracted praise, it also drew resistance from urban mayors and legislators who said the state’s largest insurer had no right to dictate the future of New Jersey’s health insurance landscape.
Horizon has 3.8 million members and covers more than 50% of the New Jersey market. However, it lost ground in the small group market in 2014, and company officials have said that OMNIA is designed to cut costs for small businesses, individuals, and the uninsured in one of the country’s most expensive insurance markets.
Directing Where Mothers Go
An examination of NJ Department of Health and CDC data suggests that OMNIA could have far-reaching effects on where babies are born, including the state’s above-average number of twins and triplets. CDC figures from 2011-2013, the most recent years available, show that New Jersey has the highest rate of twins in the nation (44.3 per 1000 live births), and the second-highest rate of triplet or higher order births (174.9 per 100,000). Just over 93,500 babies were born in hospitals in 2014, according to the NJ Department of Health.
However, 2 hospitals that have handled high numbers of twin births in recent years may not be financial options for women expecting a multiple birth. St. Peter’s University Hospital of New Brunswick, which received a Silver Beacon Award from the American Association of Critical Care Nurses for its neonatal intensive care unit (ICU), has been the busiest maternity unit in its central New Jersey market the past 2 years, but has gone to court over Horizon’s OMNIA plan. Virtua Hospital Voorhees, which is a state-designated regional perinatal center and neonatal ICU, serves the southern part of the state. Both were left out of Tier 1 when Horizon announced the OMNIA network September 10, 2015.
St. Peters, which has also received top perinatal scores from The Leapfrog Group, reports it is already seeing a transfer of maternity cases for women due to deliver in 2016, as a result of “unfavorable medical insurance status,” according to Edwin Guzman, MD, chair of obstetrics and gynecology at St. Peters.
In an earlier interview with The American Journal of Managed Care, Jeffrey Greenbaum, attorney for St. Peter’s, said the hospital was surprised that none of the broad criteria that Horizon listed for evaluating its selection of Tier 1 hospitals included maternity care. “There’s nothing concerning the care of women or children,” he said.
In 2014, St. Peter’s handled 5578 deliveries, the third-highest total in New Jersey and the most in its market, according to NJ Department of Health statistics. Only Hackensack University Medical Center and St. Barnabas Medical handled more. So far this year, St. Peter’s has handled 4844 deliveries, fourth-highest in the state and the most in central New Jersey. Besides Hackensack and St. Barnabas, both in North Jersey, the other hospital ahead of St. Peter’s is Virtua Voorhees, which so far has handled 4931 deliveries. Virtua Voorhees and Virtua Mount Holly, a level 2 maternity service, have seen increases in deliveries since another maternity wing in the area closed.
The 4 busiest hospitals, as well as Monmouth Medical Center and Morristown Medical Center, also handled the most twin births over the past 2 years. The number of twin births at a given hospital is more variable from year to year, and the 2014-2015 totals for the hospitals are: Hackensack, 292; Monmouth, 239; Morristown, 264; St. Barnabas, 256; St. Peter’s, 245; and Virtua Voorhees, 279. No other hospital in New Jersey had more than 200 twin births in the 2-year period.
Separate from the 17 hospitals that seek to overturn the OMNIA approval, St. Peter’s has sued Horizon to be included in Tier 1, saying in court documents that OMNIA is already disrupting its relationships with physicians. A hearing on that action is set for December 17, 2015. Virtua Voorhees is among the 17 hospitals involved in the first lawsuit.
While the suits seek different outcomes, the central complaint is the same: Horizon seeks to cut costs by asking Tier 1 hospitals to accept reduced reimbursements; in exchange, these hospitals will see more patients directed their way. Those hospitals left out of the preferred group, in Tier 2, fear a bleak financial picture over time as patients go elsewhere. Horizon insists that the first-year projection only calls for 250,000 patients migrating away from Tier 2 hospitals.
Maternity Care: A Basic Service
For many women, having a baby may be the only time they ever stay overnight in a hospital. It’s such a universal service that Horizon features a normal delivery as one of its cost comparisons on its website, to help consumers evaluate the different OMNIA plan levels.
In fact, New Jersey legislators criticized Horizon when it failed to include Tier 1 obstetric services in any hospital in the 2 counties where most state public employees live. A notice that OMNIA enrollees can use any hospital in these 2 counties for obstetric services only quietly appeared on the website during the Thanksgiving holiday weekend.
However, as an editorial in one of the state’s newspapers noted, if there are complications for the newborn, the mother would face the co-insurance amounts for being outside the preferred tier, or the newborn would need to transfer to another hospital.
These provisions don’t change a central fact about OMNIA: for women whose employers or spouses select this coverage, it will make financial sense to select a hospital in Tier 1 when planning a birth, because if complications occur, the out-of-pocket obligations could be high.
A review of the different OMNIA individual plans on Horizon’s website shows there is a substantial difference between Tier 1 and Tier 2 costs in maternity care, even for a normal delivery. A woman planning to have a baby would likely select a gold or platinum plan; the out-of-pocket amounts for using a Tier 1 hospital in the cost comparison are listed as $690 (gold) and $480 (platinum), based on an estimated overall cost of $7540. By contrast, if a person with a gold plan used a Tier 2 hospital, she would have to satisfy a $1000 deductible for an individual (or $2000 for a family), plus 30% coinsurance, for a minimum out-of-pocket of $3262.
However, in this scenario, a woman is able to plan ahead and the delivery is normal. In New Jersey, 28% of births are by Caesarean section, according to The Leapfrog Group, and the Guttmacher Institute estimates that half the pregnancies in the United States are not planned. An unplanned pregnancy means a mother might not have the opportunity to upgrade her plan from bronze or silver, which would make the out-of-pocket obligation even higher if she selected a Tier 2 hospital. (A silver plan is considered the benchmark for cost comparisons under the Affordable Care Act.)
Horizon has maintained that OMNIA it is not a narrow network, because patients are not denied access to Tier 2 hospitals; they are simply asked to pay more. However, critics of OMNIA say the cost difference to patients may be substantial, and could have the same effect. A keynote speaker at the recent National Association of Managed Care Physicians Fall Forum characterized OMNIA as a narrow network.
The American Journal of Managed Care sent several emails to Horizon’s spokesman since Friday seeking comment for this story but did not receive a response.
“A Loss of Clinical Material”
Guzman, of St. Peter’s, said that the hospital is the only one in central New Jersey that cares for enough low birthweight babies (less than 1500 grams) to have consistently favorable outcomes in these cases. St. Peter’s, he said, has nationally and internationally recognized maternal fetal medicine specialists, along with specialists in areas such as perinatal genetics, pediatric surgery, and pediatric renal medicine who have handled the highest-risk infants for years.
When St. Peter’s cannot handle a case, it has a relationship with Children’s Hospital in Philadelphia and arranges for a transfer, Guzman said. (Virtua Voorhees also has a relationship with Children’s Hospital of Philadelphia).
“It would be a great disservice to the women and their neonates of New Jersey not to have access to the quality perinatal services at (St. Peters) due to the medical insurance tiering system,” Guzman said. “This will result in the loss of autonomy in medical decisions and force women to leave the services of their personal physicians for those with more favorable status with their medical insurance carrier and be served by hospitals at greater distance from their homes.
“Lastly, this will result in a loss of clinical material to the Perinatal Center at (St. Peter’s) which could over time erode the quality and experience which has taken decades to build and acquire.”