Two More NJ Hospital Groups Drop Out of Suit Against Horizon

Of the original 7 hospital groups, only 3 are still challenging New Jersey's largest insurer over its creation of a tiered network plan.

Two more hospital groups have dropped out of the suit against Horizon Blue Cross Blue Shield of New Jersey over the way it created a tiered network plan in late 2015.

Word came early Tuesday that Capital Health, the original lead plaintiff, had ended litigation. Then, the Asbury Park Press reported that JKF Health had also dropped out. That leaves 3 of the original 7 groups remaining to appeal to the New Jersey Supreme Court.

Early Tuesday, Horizon commented on Capital Health’s decision: “We are very pleased that Capital has decided to formally end its involvement in the lawsuit. We look forward to continuing on our long history of collaboration with Capital to meet the health care needs of our members.”

Last month, an appellate panel dealt back-to-back blows to the hospitals. First, the panel found that state regulators were correct to approve the network; then, they ruled unanimously that Horizon did not have to turn over confidential information in a separate suit, which claims Horizon violated contracts with the hospitals.

The second matter is considered key: If Horizon wins the contract dispute, it will be clear the insurer has wide latitude to set up tiered networks, as long as they have providers to meet rules limiting how far consumers must travel for care. So far, Horizon is winning: In turning down the hospitals’ information request, judges said the hospital’s arguments “rest on the slenderest of reeds.”

Horizon unveiled its tiered network and population health plan, called OMNIA, in September 2015. The plan took effect at the start of 2016 and had enrolled 234,500 through February. Consumers who buy OMNIA plans pay lower premiums and out-of-pocket costs in exchange for using hospitals and doctors in the preferred tier, known as Tier 1.

OMNIA features a population health alliance of several large hospital systems and a physicians’ group, which will accept lower payments in exchange for more patients being directed their way. This group formed the core of Tier 1; other hospitals were added based on geography to meet state requirements, but they are not part of the alliance. All other hospitals that accept Horizon were put in Tier 2. OMNIA was criticized for putting most of the state’s Catholic hospitals in Tier 2.

Steven Goldman, attorney for the hospital group, said in a statement that if the remaining hospitals ultimately succeed, their efforts will benefit the entire group. “We continue to believe that Horizon should be transparent to New Jersey consumers and providers with respect to information that impacts their healthcare decisions,” he said.

Trinitas Regional Medical Center, and St. Luke’s in Warren had previously dropped out of the suit.

Horizon is New Jersey’s largest insurer with 3.8 million enrollees.