Horizon’s Omnia Health Plan Divides N.J. Hospitals

2 years ago
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Horizon Blue Cross Blue Shield of New Jersey sees its newest coverage plan as a potentially transformative product, just what the health-care system needs to reward successful medical treatment and keep costs down by moving away from the traditional fee-for-service model.

But the Omnia Health Plan, along with its payment model, has triggered three lawsuits, five hearings in Trenton, a dozen bills proposed by legislators and a costly public-relations war.

In the most recent turn of events, a package of bills that would require tougher state regulation of plans like Omnia was passed by an Assembly committee in April.

“I’ve worked in health-care policy in New Jersey for roughly 20 years, and I can’t recall another issue that has prompted so much passionate debate among providers,” said Betsy Ryan, president of the New Jersey Hospital Association.

The Omnia Health Plan revolves around a so-called tiered model of hospitals and doctors. In Horizon’s Tier 1 are 34 hospitals that include most of the state’s big health-care chains. The 27 classified as Tier 2 are dominated by the state’s free-standing and Roman Catholic providers.

Omnia subscribers can visit providers in either category, but those who go to Tier 1 facilities receive lower deductibles and copays. Omnia is 15% cheaper than Horizon’s traditional plans that have broad networks.

“This is really an effort to change how health care is financed and delivered in the state of New Jersey,” said Robert Marino, president and chief executive officer of Horizon, in an interview.

In September, the state Department of Banking and Insurance signed off on Omnia enrollment to begin in 2016. Lawmakers expressed concern that the plan was being rushed, and 17 Tier 2 hospitals sued state banking regulators in November.

Omnia has divided doctors, hospitals—and even politicians who usually agree with each other.

Opponents contend the plan was hatched in secret, rubber-stamped by state regulators, and designed to encourage customers to go to large hospital networks above independent facilities that have provided care for local communities for years.

“We applaud lower costs but we all have to be in the game. We all have to be competitors,” said Michael Maron, president of Holy Name Medical Center, a Bergen County hospital that Horizon designated a Tier 2 facility.

Tiered networks aren’t new to New Jersey or nationally. The Affordable Care Act has encouraged demand for tiered and narrow network plans as more low-income residents buy insurance for the first time on health-care exchanges. In New Jersey, more than 288,500 residents receive coverage through the health-care exchange.

“We are in an environment where we are expanding the market to people who are extremely price-sensitive,” said Joel Cantor, director of the Center for State Health Policy at Rutgers University.

Horizon, New Jersey’s largest not-for-profit insurer, has nearly 3.9 million members, more than 50% of the state’s commercial health-insurance market, according to state statistics. The uproar around the $12 billion company’s decision to offer a tiered plan stems in part from its market dominance, said Linda Schwimmer, president of the nonprofit New Jersey Health Care Quality Institute.

Last year, Horizon negotiated price and quality benchmarks with Tier 1 hospitals, with the prospect of additional volume of patients going to their facilities. It didn’t hold the same discussions with the Tier 2 hospitals, both sides said.

Opposition intensified after Horizon won approval from the state in September.

“This is all done by Horizon on its own terms in a secret way,” said Steven Goldman, a lawyer representing the 17 Tier 2 hospitals and a former state banking commissioner.

Horizon executives disagree, pointing to a list of publicly released metrics that were used to evaluate providers for Omnia. It has refused, however, to disclose an internal report that contains the scoring of providers, saying it is proprietary. Tier 2 hospitals have sued to make the report public, and judges in two counties have ruled it should be disclosed. The case is being litigated on appeal.

The company supports more transparency for tiered networks statewide, executives said.

So far this year, 234,235 Horizon members have chosen Omnia, including 41,248 enrollees who didn’t previously have insurance, according to company figures. Newark city employees began a special Omnia enrollment period on April 1.

Mr. Maron said as more customers opt for Tier 1 hospitals, Tier 2 providers will see a growing hit to their bottom line. Mr. Marino cited a Horizon analysis that said Omnia could cost Tier 2 hospitals an average of $1 million each in lost business, though he doubted the plan would force any facility to close.

Horizon is in discussions with the Tier 2 hospitals, and some could be invited to join Tier 1 at a future date depending on how the market develops, Mr. Marino said.

Republican Gov. Chris Christie has said he hadn’t yet taken a stance on Omnia and encouraged a “robust public discussion” on the issue meanwhile.

At least some of that discussion has come at a price. Blue Cross spent $621,000 on lobbying last year that included Omnia discussions, up 28% from its 2014 spending, according to the most recent state figures. Opponents hired MWWPR, a large national public relations firm, in February.

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