NJ's Attorney General Ends Probe of OMNIA on Eve of Hearing

The acting attorney general, elevated on Monday, issued a letter later Friday saying he found no problem with the way Horizon's OMNIA Health Alliance was implemented. The move comes days before a hearing on legislation regarding tiered networks, to be chaired by one of the lawmakers who asked for the probe.

Four days into the job, New Jersey’s acting attorney general quietly ended a probe into the Horizon OMNIA Health Alliance, which was requested last fall by two Democratic senators–including one who will chair Monday’s hearing on bills aimed at the alliance and its related tiered health network.

Acting Attorney General Robert Lougy signed a one-paragraph letter, which was sent late today to Horizon Blue Cross Blue Shield of New Jersey informing the state’s largest health insurer that his review of the “OMNIA Health Alliance,” found it did not violate state law as implemented.

However, some things were unclear at press time.

The letter references the “OMNIA Health Alliance,” but not the tiered network that was approved by the NJ Department of Banking and Insurance (DOBI) in September. Horizon has made a distinction between the Alliance, a contractual relationship among several large health systems to implement a statewide population health initiative, and the tiered network plan that required regulatory approval.

It’s that second element that's drawn fire from some legislators and from hospitals left out of OMNIA’s preferred tier. Under the plan, hospitals mostly in large health systems making up the Alliance are in Tier 1, and consumers who purchase the plan enjoy reduced premiums and lower out-of-pocket costs for using these facilities. Other hospitals are in Tier 2 and remain eligible for Horizon reimbursement, but consumers with OMNIA coverage face higher out-of-pocket costs if they use hospitals in this tier.

The letter to Horizon was released after 5 p.m. today; a call made after business hours to the Attorney General’s press office for clarification was not returned.

The creation of OMNIA is Horizon’s largest foray into population health management; partners in the Alliance are expected to make investments in electronic health records and other systems to share information and take part in alternate payment models. Horizon has said something like OMNIA was needed to address New Jersey’s high healthcare costs, which make it hard for small businesses to afford coverage for employees and hard for individual consumers to pay for coverage.

However, hospitals in Tier 2 have protested the way OMNIA was created, especially the lack of information on why some hospitals were included in the preferred tier and others weren’t. Critics note all but one of the state’s Catholic hospitals and several safety net hospitals were excluded from Tier 1; cities like Elizabeth and the state capital of Trenton have no Tier 1 facility.

Sister Patricia Codey, SC, Esq. discusses legislation up for a hearing on Monday.

Multiple lawsuits have been filed over the plan, against both Horizon and DOBI. Hospitals seek to force Horizon to disclose information about the selection process, and a suit against the regulators seeks to overturn their decision. A separate suit claims the way OMNIA was advertised implied hospitals outside Tier 1 were of lower quality. In turn, Horizon has sued two hospitals over their efforts to fuel public sentiment about OMNIA.

Senators Joseph Vitale and Nia Gill, chairs of the Health and Commerce committees, respectively, in October co-chaired a marathon joint hearing that featured 4 hours of testimony from Horizon executives, who gave some broad parameters for how they selected Tier 1 members. Gill, in particular, seized upon the fact that state regulators had not accounted for how OMNIA wouldcover obstetrics care in some parts of the state before they signed off on the network, which was approved several days after the high-profile rollout of the Alliance September 10, 2015, as reported by The American Journal of Managed Care.

Vitale and Gill concluded the hearing by asking then-Acting Attorney General John J. Hoffman to investigate the circumstances surrounding OMNIA's creation. When Hoffman recused himself due to a conflict of interest, Lougy, as First Assistant Attorney General, became responsible for the matter. The senators released a joint statement last night regarding a separate letter they received on the decision:

“Five months ago we requested that the Attorney General establish a permanent oversight mechanism for the process of tiering and rating health care providers in New Jersey.  We made this request after an extensive hearing that revealed a lack of transparency and oversight to protect consumers in tiered network plans.      

                                 

“As we prepare for a hearing on Monday to discuss regulating tiered networks, we thank the Acting Attorney General and his office for their review; however, the letter does not address our request to ‘establish a permanent oversight mechanism for the process of tiering and rating health care providers in New Jersey.’” They cited action taken by New York Governor Andrew Cuomo when he was attorney general.

Lougy was elevated to the acting post on February 29, 2016, by Governor Chris Christie after Hoffman left for a job at Rutgers University. While today’s letter is signed by Lougy as “Acting Attorney General,” Christie’s announcement said Lougy’s appointment as the state’s top law enforcement official was effective March 14, 2016. In New Jersey, the Attorney General is appointed by the governor but must be confirmed by the Senate.

Sister Patricia Codey, SC, Esq., president of the Catholic Healthcare Partnership, told AJMC in an interview this week that bills to be heard Monday will address the need for greater transparency in creating tiers, and for health plans to have clearly defined standards in setting tiers. The bills will be heard in the Senate Commerce committee, which Gills chairs.

“Is there an opportunity for all stakeholders to come to the table and make their cases?” Codey asked. Leaving nearly all the Catholic hospitals out of Tier 1 will make it difficult over time for them to fulfill their mission of caring for the poor, the uninsured, and the vulnerable, she said.

"The acting attorney general’s letter is not surprising.  We continue to believe that (the Department of Banking and Insurance) has not fulfilled its responsibility to take into account the public interest in its review of the OMNIA plan, nor do we believe that the plan has met DOBI's network adequacy requirements,” said Steven Goldman, attorney for the group of hospitals suing to overturn the decision.

“If OMNIA is allowed to continue, New Jersey's health care system–including patients, doctors and hospitals–will be adversely affected.  We remain confident that the decision to approve the plan will be reversed in the judicial process,” he said.

In their statement, Vitale and Gill said today’s development makes legislation even more urgent. “We look forward to continuing our work on Monday,” they said.