In New Jersey, Horizon BCBS, Catholic Hospital Huddle With Judge Over OMNIA

St. Peter's Hospital in New Brunswick won the right to a hearing, where New Jersey's largest insurer will have to say why the Catholic hospital was not included in a preferred network set up alongside a major population health initiative.

Lawyers for Horizon Blue Cross Blue Shield New Jersey and a Catholic hospital with the state’s largest neonatal intensive care unit were scheduled to meet today with a judge, who will rule on the fate of a controversial population health plan being offered by the large health insurer.

On Monday, Judge Frank M. Ciuffani said that St. Peter’s University Hospital in New Brunswick deserved a day in court, and he told Horizon BCBSNJ to produce information showing why it had left the hospital out of the preferred hospital network it rolled out alongside the health initiative.

Dubbed OMNIA, New Jersey’s largest foray into value-based care was unveiled with a huge splash on September 10, 2015; while Horizon is being careful to distinguish between the network, which lowers rates 15%, and the population health “alliance,” it’s fair to ask whether that distinction was ever clear to consumers.

Right now both sides are claiming victory. When he ordered the hearing Monday, Ciuffani did not order Horizon to stop marketing or selling OMNIA, as St. Peter’s requested. Open enrollment for many businesses and the federal marketplace is in full swing, and enrollment for public employees served by the State Health Benefits Program ends Saturday.

“It is unfortunate that St. Peter’s, one of our longstanding network hospitals, would choose litigation instead of conversation,” said Thomas Rubino, Horizon’s public affairs director, after the initial ruling. “Horizon will vigorously defend its ability to offer the people of New Jersey innovative, low-cost health insurance options.”

But an expedited hearing is a win for St. Peter’s. It means that Horizon will have to give more details than it has thus far about how it created the “Tier 1” network, whose hospitals will accept reduced reimbursement in exchange for having more patients routed their way. Consumers, meanwhile, will pay less premium and reduced out-of-pocket costs to use Tier 1 facilities. All this has the rest of Horizon’s hospitals—so-called Tier 2—in a state of panic.

In lengthy filings, St. Peter’s attorneys argued that Horizon breached its contract with the hospital by failing to offer adequate notice and a chance to show it met the criteria for the preferred hospital network, which was quietly approved by state regulators September 18, with an effective date of September 15, 2015.

From the start, Horizon has touted OMNIA as a response to New Jersey’s high health insurance costs, which are among the most expensive in the country. Value-based healthcare has been slower to come to this state than other parts of the country, and Horizon’s most recent annual report shows the insurer saw a decline in the small group market; officials say the OMNIA product is aimed at this group and individuals, including 40,000 who are currently uninsured.

But there’s been debate whether the state’s largest insurer, which covers 3.8 million members and enjoys the benefits of being a not-for-profit entity, should dictate the future of New Jersey’s health insurance market. St. Peter’s, at least, argues in court documents that Horizon is deciding on its own that big will win over small, and that independent—and Catholic-affiliated players—will be at a disadvantage.

“Horizon should not be allowed to decide unilaterally which hospitals will survive and thrive and which will suffer or fail, using secret criteria and without consultation or review,” the filing states.

St. Peter’s filings offer blow-by-blow arguments why Horizon failed to meet terms of an agreement that required it to give the hospital an opportunity to take part in the preferred network and any new products the insurer offered. The documents assert that St. Peter’s has made a full commitment to population health and scores at or near the top on a number of measures for patient satisfaction. It cites a diabetes screening program that it says has brought down emergency room visits and hospital admissions. Yet being left out of the preferred tier implies a lack of commitment, and Horizon has said as much, its attorneys argue.

“Our reputation is getting damaged every day when they repeat these claims,” Jeff Greenbaum, an attorney for St. Peter’s, said this week.

The court filings include a statement from Garrick J. Stoldt, St. Peter’s chief financial officer, who projects grim prospects for the hospital without preferred network status: if 100% of Horizon’s HMO and point-of-service business moved to OMNIA, losses could be as high as $36 million. “St. Peter’s could be compelled to redesign service lines, which could include a reduction in services to the community,” he states.

St. Peter’s case amplifies the concerns of legislators at an October 5, 2015, Senate hearing: Because it has more than 50% of the market, what Horizon does causes major effects. “Like any hospital, Saint Peter’s depends on private physicians with admitting privileges for its flow of patients,” the court filings say. “The availability of the OMNIA product is disrupting those relationships by encouraging physicians to prefer Tier 1 hospitals to St. Peters.”

For its part, Horizon is taking care to distinguish between the OMNIA network plan, which required regulatory approval, and the alliance, which involves its contractual agreements with 5 major health systems, most with multiple hospitals, and a large physician network to pursue joint population health strategies, including major information projects. Technically, they are separate.

However, The American Journal of Managed Care previously obtained documents from the N.J. Department of Banking and Insurance that showed the 2 were being developed simultaneously. Hospitals outside the alliance were added to the OMNIA network for rate purposes only, because regulators wanted consumers to get the same out-of-pocket costs statewide.

When asked if the OMNIA “alliance” and “network” were, in fact, interdependent, Horizon spokesman Thomas Vincz responded, “The only real alliance tie-in is that there are 22 hospitals operated by OMNIA Alliance partners in Tier 1, and it’s at these facilities where consumers will receive the added value of population health and other well-care innovations that evolve from the Alliance relationship.”