In Creating Tiered Networks, How Much Transparency Is Fair?

As the fallout over Horizon BCBS of New Jersey's OMNIA tiered health plan continues, the legislature weighs the question: how much transparency will protect consumers and safety-net providers while ensuring a vibrant market that drives down costs?

New Jersey Senator Ray Lesniak gave reporters his imitation of President Lyndon Johnson Monday when he hiked up his pants—one leg at a time—to show off his surgically repaired knees.

Lesniak’s visual highlighted the quality care from his hometown Trinitas Hospital—but on this day when the conversation was about transparency in healthcare, it raised the question: how much is too much information?

Legislators spent hours discussing just how much insurers should have to disclose—and how specific criteria should be—as they debated bills inspired by OMNIA, the alliance and tiered network plan that is Horizon Blue Cross Blue Shield’s vehicle for expanding population health in New Jersey.

To Lesniak, “Where there’s secrecy there’s suspicion.” The veteran legislator was among those who want Horizon to share more than it has about the selection process that created OMNIA, to protect consumers and to ensure that safety net hospitals treating high numbers of poor, non-English speaking patients aren’t treated unfairly.

But the day also brought testimony from the state’s most powerful Democrat—Senate President Steve Sweeney—who said the needs of everyday consumers have been forgotten amid the lawsuits, press conferences, and demonstrations.

The creation of OMNIA has attracted national attention for its scope and the controversy it has generated in trying to take on the second-highest healthcare premiums in the country. All agreed Monday that low-cost, high quality healthcare is needed, but the route to get there has upended politics as usual in New Jersey.

OMNIA is both a healthcare alliance that demands contractual obligations from 6 major health systems and a physicians’ group, and a tiered health plan that offers lower premiums and out-of-pocket costs to enrollees who stick with certain providers—especially hospitals in the preferred tier, known as Tier 1. A second group of hospitals, known as Tier 2, can still be reimbursed by Horizon, but if consumers have OMNIA coverage they will pay more. The population health piece requires the alliance partners to make investments in electronic health records, and they must agree to alternate payment models that feature lower rates upfront with the promise of shared savings on the back end.

At Monday’s hearing, business leaders and labor unions were united in demanding lower healthcare costs for employers and workers. Meanwhile, advocates for the poor and safety net hospitals, including the Catholic Healthcare Partnership of New Jersey, found themselves allied with the Medical Society of New Jersey, which yesterday announced plans to join a lawsuit seeking to overturn OMNIA’s regulatory approval.

Bills discussed yesterday would require more transparency in creating tiered health plans, set standards for creating tiers, give providers rights to appeal, and add the Department of Health to oversight process. While the head of the New Jersey Association of Health Plans (NJ-AHP) embraced some proposals for improved consumer education and plan disclosure, the bills raise questions: how much information should insurers have to disclose in a competitive environment? And should all criteria for a preferred tier be purely objective?

Sweeney, a likely candidate for governor next year, said he wants “transparency” to extend to doctors and hospitals. “I support requiring insurance companies to disclose the criteria they use in developing tiered products,” Sweeney testified. “I also support requiring insurance companies to fully educate consumers about their cost-share obligations. I don’t believe this type of transparency will hurt any current products, increase costs, or threaten consumer choice.

New Jersey, he said, “can no longer afford a healthcare system that rewards the number of patients who enter a hospital or doctors’ office—almost like a sports team is rewarded for bringing fans into the stadium. The idea is to keep patients out of the hospital, not bring them in.”

He called on each of New Jersey’s 72 hospitals to send him information on their “pure profit margin.” To which Sister Patricia Codey, SC, Esq., president of the Catholic Healthcare Partnership, requested that the state’s insurers do the same. All but one of New Jersey’s Catholic hospitals were left out of the preferred tier.

Between Sweeney, who is a labor official, and the state’s public employee unions, worker groups were visible at Monday’s hearings. Long before the OMNIA controversy, Sweeney has been among those looking for ways to retain benefits while keeping them affordable and making New Jersey more competitive.

The harshest criticism against OMNIA is the way it came together. The giant insurer, with more than half New Jersey’s market at 3.8 million enrollees, ran an internal process to select the large health systems that make up alliance, and filled out the preferred tier based on geography when state regulators demanded it. Once excluded from the preferred tier, hospitals could not appeal or find out why they were deficient.

Given its footprint in New Jersey, Horizon’s action has the potential to reshape the healthcare market, and opponents of OMNIA say it threatens the finances of safety net hospitals if left unchecked. On Monday, Lesniak asked whether Horizon’s selection criteria were driven by quality, or whether the insurer “backed in” to its choices by deciding the scope of discounts and then figuring out which health systems had the patient volume to offer them.

Senate bills discussed would do the following:

· The first Senate bill creates transparency for doctors and hospitals to understand tier criteria—including the relative weight of criteria. It creates timelines for notification and an appeals process ahead of open enrollment. The bill also creates stronger consumer disclosures, including the criteria and weights for the preferred tier.

· A second Senate bill would update the network adequacy standards used by the NJ Department of Banking and Insurance, protect patients receiving emergency services from having to change hospitals, and require special notice for pregnant women or terminally ill patients if their providers are removed from a preferred tier.

· A third bill would prevent “exorbitant cost sharing between tiers” and allow more than 2 tiers within a network.

In addition, Assemblyman John Wisniewski said he was also introducing a bill to freeze OMNIA enrollment until issues with the tiered network are resolved.

Ward Sanders, president of the New Jersey Association of Health Plans, presented testimony yesterday that cautioned against requiring health plans to disclose all selection criteria, except to regulators. NJ-AHP also had concerns about the bill’s appeals language, given that health plans have “tens of thousands of provider contracts,” and it warned against the emergency services protections without steps to prevent steering patients to the emergency room.

In his testimony, Sanders explained that as insurers take on population health, subjective criteria like a provider’s willingness to embrace change—and the move away from fee-for-service—must be part of the process.

Since a string lawsuits began over OMNIA, Horizon has allowed Sanders and NJ-AHP to testify on its behalf. Its officials were clearly pleased with Sweeney's testimony yesterday and issued a statment in support of his position. "We agree with Senate President Sweeney that tiered products like OMNIA are a positive option for consumers ... His call to end all of the antics and expedite, not delay, the transition to value-based care and focus on the consumer is precisely what is needed."

While Senator Nia Gill, who chaired the hearing, started with the statement that “tiered networks are here to stay,” not everyone agreed. One hospital executive said tackling healthcare costs requires focusing on the factors that are driving them up, like end-of-life care.

“There is no need for tiers,” said Mike Maron, chief executive of Holy Name Hospital. “Tiers are a tool; they can be wielded for the benefit of the participants or their harm.”

Codey, who has led the fight on behalf of the Catholic hospitals, implored the state’s political apparatus not to hide behind regulations and to make “moral, ethical” choices on behalf of safety net hospitals.

The root of the word OMNIA, she said, “is the Latin word for ‘all things.’ It offers infinite possibilities. … And yet OMNIA does the opposite. Consumers have fewer choices.”