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Another Win in Court for Horizon in OMNIA Insurance Battle

Hospitals refused access to information about how the insurer designated them as ‘tier 2’ facilities

horizon OMNIA

Horizon Blue Cross Blue Shield won an appellate court decision Thursday upholding the insurer’s right to keep its network agreements private.

The decision combined two separate lawsuits, one concerning St. Peter’s University Hospital in New Brunswick and the other Capital Health in Pennington, both of which were petitioning the court to order Horizon to release materials leading up to the creation of Horizon’s controversial OMNIA insurance plan.

The hospitals, designated “tier 2” under the OMNIA plan, are suing Horizon for breach of contract. Yesterday’s decision involved their request to have Horizon turn over a complete McKinsey and Co. report, as well as materials related to internal discussions, that could outline the insurer’s decision-making process for assigning hospitals either a “tier 1” or “tier 2” designation.

The plaintiffs said they will appeal the decision to the state Supreme Court. The lawyer for Horizon said he didn’t anticipate the Supreme Court accepting the case, since the appellate court had ruled 3-0.

Through OMNIA, Horizon is able to offer lower prices to consumers than are available in its other plans because of the nature of the tiered system. Hospitals labeled “tier 1” agree to receive lower reimbursements from Horizon because they anticipate higher patient volume. Those savings are then passed along to customers, which allows for lower costs but equivalent revenue for Horizon.

When the OMNIA system was first being developed, hospitals were evaluated and given a score through six criteria (developed with McKinsey) including clinical quality, services, consumer preference data, value-based care capabilities, size, and willingness, and ability to transition from a volume-based reimbursement model to a value-based care delivery system. Horizon did not disclose its standard for selection or give the hospitals the opportunity to apply to be “tier 1.”

Horizon argued that the intricacies of its selection process were not relevant and should not be disclosed during the discovery portion of the case. It claimed offering this information would reveal “privileged trade secrets and confidential business information not subject to discovery.”

The court’s decision upheld Horizon’s arguments and said that the language used in each of the partner hospitals’ agreement contracts does not require the insurer to give them an opportunity to apply for inclusion in a specific tier.

Steven M. Goldman, attorney for the “tier 2” hospital coalition and a former commissioner of the New Jersey Department of Banking and Insurance, said in a statement that he plans to appeal the decision to the Supreme Court.

“We are disappointed with the Appellate Division's decision today,” Goldman said. “It is particularly disappointing that the Appellate Division's ruling favors Horizon’s secrecy over consumers need for transparency. We have learned through discovery that the OMNIA selection process was flawed and not what Horizon has represented to the public. Even without the disclosure of this information, the Hospitals are confident they will prevail on the merits of the claims.”

Horizon officials, however, are happy with the decision. Horizon chairman and CEO Robert Marino said in a statement that the decision is “another in a long line of wins for the consumers of New Jersey.”

Horizon director of public affairs Tom Wilson released a statement that said the hospital plaintiffs are “working to obstruct Horizon’s effort to lower the cost of health care.” He said, “The attorneys for these hospitals should apologize to consumers for their failed effort to defend the indefensible sky-high cost of health care in New Jersey.”

Carly Sitrin is an editorial intern at NJ Spotlight.

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