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Insurance Giant Defends Controversial OMNIA Plan in Response to 'Smear' Campaign

Horizon Blue Cross Blue Shield takes legal action in response to claims by hospitals opposed to new tiered health plan

horizon OMNIA

Five months after it announced a new tiered insurance plan designed to help curb healthcare costs in New Jersey, Horizon Blue Cross Blue Shield continues to come under fire for the way it developed and promoted its new network of doctors and hospitals and the impact the new product will have on the state’s broader medical landscape.

But last week, Horizon turned the tables on its detractors, taking legal action to block a public relations campaign that healthcare providers had launched against the OMNIA Health Care Plan and shuffling its external affairs team to further coordinate public communications.

The complaint, filed in Essex County Superior Court, cited “a relentless series of advertisements that at best can be called a smear campaign” organized by hospitals opposed to OMNIA that “went so far as to advertise that Horizon does not like babies, spewing repugnant and false advertisements against Horizon in an attempt to convince the public not to enroll in OMNIA, a health plan that takes a quantum leap forward in an attempt to fix New Jersey’s broken healthcare system.”

Bruce Rosen, an attorney for the two hospitals named in the complaint -- Holy Name Medical Center in Teaneck and The Valley Hospital in Ridgewood -- called the suit frivolous and said it was just an attempt to distract attention from the controversy surrounding OMNIA’s rollout.

Horizon spokesman Tom Vincz said that when the hospitals declined the company’s request to remove the “false and misleading” ads, the insurer was left with little choice but to go to court.

Horizon’s legal move is the latest salvo in the ongoing battle between the state’s largest insurance company and a group of healthcare providers who have tried to block OMNIA.

It also comes as state legislators prepare for a new round of hearings on proposals designed to further regulate tiered plans like OMNIA, which offer patients lower costs in return for accepting fewer choices of doctors and hospitals.

Many health care experts agree tiered plans, like OMNIA, and other, more restrictive “narrow networks” are essential pieces of the insurance puzzle taking shape in the wake of the federal Affordable Care Act. In these models, a group of medical providers agrees to accept lower reimbursement rates if the insurance company can assure them a certain number of patients; the insurance company passes these savings on to patients in the form of lower out-of-pocket costs.

With OMNIA, Horizon split its providers into two tiers. While the monthly premiums for both OMNIA tiers are the same, patients can save on co-pays and other costs by visiting the 36 hospitals and 24,000 doctors in the Tier 1 group.

Horizon also added a “value based” component to OMNIA that offers financial incentives to Tier 1 providers who help patients stay healthy or recover more quickly. As a result of this structure, OMNIA premiums are roughly 15 percent less than any other Horizon plan.

Changing healthcare market

Wardell Sanders, president of the New Jersey Association of Health Plans, the trade organization that represents health insurance carriers – including Horizon -- said that while his members are in competition for consumers, they all agree tiered products like OMNIA and the shift toward rewarding better care are critical pieces in the new healthcare marketplace.

“Consumers deserve to have choices and the power to select a health insurance plan that best meets their needs. Consumers who want particular benefits, whether they be lower-cost policies, lower cost-sharing, or access to specific providers who are important to them should be able to choose a policy that meets their needs,” Sanders said.

But criticism of OMNIA was swift and widespread following Horizon’s announcement of the new plan in September. State Sen. Nia Gill (D-Essex) and Sen. Joseph Vitale (D-Middlesex) held legislative hearings in October and sought to delay the plan’s implementation until state officials provided greater oversight. The senators even asked the Federal Trade Commission to intervene to protect customers.

In November and December, a flurry of lawsuits from the hospitals not included in the Tier 1 group challenged Horizon’s process for creating the plan. While some court challenges continue, Horizon launched the plan on schedule, with enrollment for state workers beginning in December, followed by the general public last month. So far, consumer response has been positive, Vincz said last week.

The public campaign by the Tier 2 hospitals has sparked some of Horizon’s most aggressive responses to date.

Anti-OMNIA campaign

In October, the group -- led by Holy Name, in Teaneck -- launched a campaign designed to rebut any suggestion that Tier 2 hospitals were of lesser quality and to discourage the public from signing up for OMNIA. (Horizon said the tiers are not quality rankings, but reflect half a dozen factors – including quality - and depend in part on the contract negotiated with each provider.)

The PR effort included newspaper ads, website banners and five massive billboards; one on Route 80 and four digital versions on Rt. 4, clustered around the heavily-trafficked intersection with Rt. 503 near Riverside Square Mall – just a few miles from Hackensack University Medical Center, a major Holy Name competitor that was included in OMNIA’s Tier 1 group.

“There’s been a lot of spinning to what these things mean,” said Holy Name CEO Mike Maron, who spearheaded the campaign.

Maron said Holy Name provides among the best and most affordable healthcare statewide, based on rates and results, but – like other small, stand-alone hospitals – it was excluded from the top OMNIA tier because it doesn’t have the patient volume and market share of larger healthcare systems.

“This is a David and Goliath story,” Maron added. “But it’s also a moral and ethical one for us. They are misleading the public; our costs are lower and our quality is at par or better,” than many Tier 1 facilities, he said.

Horizon, which insures 3.8 million New Jersey residents, responded to Maron’s message by filing the four-count complaint that charges false advertising, defamation, disparagement and “tortious interference,” and seeks damages to be determined at trial.

The complaint also expresses concerns about the several websites maintained by the hospitals that seek to steer consumers away from OMNIA and a letter that Valley Hospital sent to patients warning them about changes under OMNIA. Exhibit B in the complaint contains a photo of one of the billboards, which reads “It’s your baby. You want the best. HORIZON OMNIA COULDN’T CARE LESS.”

“Some of it was just trying to get attention,” Maron conceded, explaining that the ads were created in-house. “The truth is, they were scheduled to come down,” he said, “but we’re leaving them up more in defiance now.”

Rosen, the attorney for Holy Name and Valley, said the billboard message is more of a rhetorical device and that it will be hard for Horizon to prove it is literally false, which is the standard it needs to meet. “They’re really straining to find false advertising or defamation here,” he said.

Claims called 'outrageous'

Vincz, of Horizon, said in a statement that it was outrageous to suggest that “our company couldn’t care less about babies,” and the complaint details numerous pre- and post-natal health programs available to Horizon members. The complaint also claims that the ads mislead customers by suggesting certain hospitals are excluded from OMNIA plans and that patients could be penalized for visiting facilities not in Tier 1.

“This is false. In truth, access to care at the (plaintiff) hospitals is unchanged for Horizon members and not limited in any way. Any Horizon member who did not enroll in OMNIA has access to the identical hospitals with essentially the same benefits and costs as they had before OMNIA was rolled out. For those people, nothing at all has changed; certainly access has not been limited in any way,” the complaint states.

The complaint, filed in Essex County Superior Court, was moved to federal court this week since the questions involved relate largely to constitutional free speech issues, according to the plaintiff’s legal team.

Horizonsaid it has hired seven new staffers for its external affairs teams and is restructuring the government affairs, public affairs and other departments so they can work together more effectively. The newcomers include former state GOP chairman Tom Wilson; Gov. Chris Christie’s previous deputy chief of staff, Nick DiRocco; , Michele Jaker, longtime chief of staff to Sen. Joseph Vitale (D-Middlesex), and former 101.5 FM radio State House reporter Kevin McArdle.

“Healthcare costs are crushing New Jersey families and businesses,” said Horizon Senior VP of Corporate and Regulatory Affairs William J. Castner Jr., who was hired in November to oversee the changes. “The team of professionals we have assembled is committed to helping our efforts to offer New Jersey consumers high quality, low-cost health insurance.”

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