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CarePoint Health and Horizon Settle $76 Million Billing Dispute

Agreement adds three more Hudson County hospitals to insurer’s massive network

bayonne medical center
Bayonne Medical Center

Starting in October, the 3.8 million New Jerseyans who have health insurance through Horizon Blue Cross Blue Shield can visit any acute-care hospital in the state and receive treatment at the lower, in-network rates.

More than two years after they left Horizon’s network, three Hudson County hospitals and other facilities operated by CarePoint Health will rejoin the group now that the two long-embattled organizations reached an agreement in late August on payment rates.

CarePoint, a for-profit company, operates Bayonne Medical Center, Christ Hospital in Jersey City, and Hoboken University Medical Center, as well as various outpatient clinics. That makes all 72 hospitals “in-network” with Horizon, a one-of-a kind nonprofit company that is the state’s largest insurance provider.(Bergen Regional Medical Center, a county-owned facility focused on behavioral health, is not part of the system.)

Omnia dispute still outstanding

The agreement does nothing to resolve Horizon’s legal dispute over the Omnia plan, a so-called tiered system that provides discounts to patients who visit certain providers that are part of its network. Some 17 of the network’s hospitals sued the insurance provider after Omnia was first rolled out, in the fall of 2015, claiming they were improperly excluded from the group that would benefit from the potential growth in patient volume.

Most of the original plaintiffs have since reached agreements with Horizon, but a handful of hospitals remain locked in litigation. In July a judge agreed to allow them to review a consultant’s report that Horizon used to develop the network, but has claimed is confidential.

The CarePoint deal does put an end to a federal lawsuit filed nearly a year ago, alleging that Horizon owed it $76 million in unpaid bills for treatment its facilities had provided to more than 7,000 patients since June 2015. CarePoint also claimed Horizon was discouraging its members from seeking help at these sites. In return, Horizon accused CarePoint of “price gouging” and putting profits ahead of patient needs.

Important for public employees

The agreement is particularly important for the thousands of public workers in Hudson County, many of whom are covered through one of the Horizon policies available to members of the State Health Benefits Plan, which covers some 700,000 state, local, and municipal workers. In the past, CarePoint has been criticized for charging what are among the nation’s highest rates for some medical procedures.

“We’re pleased about reaching a new rate agreement with CarePoint, which will provide our members with additional options for in-network healthcare services,” said Allen J. Karp, senior vice president of healthcare management for Horizon. No details of the deal were made public.

CarePoint, which is seeking to expand its presence in the region, also embraced the deal. “We are excited to partner with Horizon to move healthcare forward in northern New Jersey,” said Jeff Mandler, CarePoint CEO. “This agreement allows CarePoint to continue to invest in our people and infrastructure while ensuring care for the most vulnerable among us.”

The settlement is the latest chapter in what has been a long-simmering dispute between the two powerful entities. CarePoint invested heavily to purchase and revive the three struggling hospitals, starting in 2008, and was forced to cancel contracts with 20 insurance companies in order to obtain rates that would cover their costs, according to the lawsuit.

Previous litigation between Horizon and CarePoint led to a 2011 truce, which resulted in a four-year deal to bring all three hospitals back into the insurance company’s network. But by the spring of 2015 CarePoint had again withdrawn from the group.

"Being out of network is not a business strategy; it is a survival strategy,” Jarrod Bernstein, CarePoint’s senior vice president for communications, explained when they filed the most recent lawsuit, in September 2016.

Racking up bills

Between that May and September of 2016, Horizon patients continued to visit these facilities, racking up roughly $115 million in charges for which the insurance company paid less than $40 million, the healthcare provider claimed. (The $76 million lawsuit sought to recover the balance for these claims.)

But that strategy didn’t sit well with the insurance companies paying for patients to receive care at these sites; while patients may have to pick up more of the cost for elective treatments, insurance companies in New Jersey must cover the total bill in emergency situations.

In fact, CarePoint has been a focal point for blame in the ongoing debate over proposals to reduce “out-of-network” bills, which advocates said add up to $1 billion a year to the cost of insurance premiums. Lawmakers continue to struggle with various proposals to better protect patients and, if possible, also reduce extravagant charges.

Barnabas moves on Bayonne

This division also helped convince RWJ/Barnabas Health, the state’s largest healthcare provider network, to open a satellite emergency department — just blocks from CarePoint’s hospital in Bayonne — earlier this summer. The facility is connected to Jersey City Medical Center, which is operated by Barnabas.

The application Barnabas submitted to the state to open the facility included support from Horizon, which had directly encouraged Barnabas to develop the facility to provide additional in-network options for Hudson County patients, according to Barnabas CEO Barry Ostrowsky.

CarePoint is also seeking state permission to build at least a half-dozen satellite emergency facilities of its own and recently opened an urgent-care center near its Bayonne hospital. Its existing hospitals have treated a growing number of uninsured patients in recent years, according to state records.

Horizon also became the target of Gov. Chris Christie’s wrath during the budget debate, as he sought to extract at least $200 million from the company to help pay for addiction programs and other health needs.

While Christie claimed Horizon was hoarding extra cash as part of its reserves — and used this claim as leverage to hold up the budget process — the resolution he reached with lawmakers resulted in a bill that was essentially a watered-down version of corporate reform he originally sought.

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