New Jersey hospital executives have a new fear – if they’re not in with the state’s biggest insurance player, they could be out of a lot of money.
Last week’s announcement of the new OMNIA Health Alliance focused on how it would benefit patients of the hospitals included in the alliance – a new insurance arrangement in which hospitals and doctors agree to changes in payments in return for their commitment to work to improve healthcare quality.
The announcement didn’t focus on the hospitals left out of the alliance while other hospitals were selected as “Tier 1” in order to fill geographic needs.
Being treated at Tier 1 hospitals will be less costly for Horizon Blue Cross Blue Shield of New Jersey members.
The hospitals not selected for Tier 1, as well as legislators in districts where they are located, are expressing concerns that Horizon built Tier 1 in a one-sided, closed process that didn’t give them a chance to participate.
They say being left out could hurt them financially, leaving them less able to serve patients.
In addition, hospital officials and legislators contend, some patients may be forced to pay more out-of-pocket or face long and difficult trips to get to a Tier 1 hospital.
Legislators are planning hearings to address those issues and to give representatives of hospitals left out of Horizon’s Tier 1 a chance to air their concerns.
Assemblyman Reed Gusciora (D-Hunterdon and Mercer) is even going so far as to say that he’d consider asking U.S. Attorney Paul Fishman to review whether there was collusion in deciding which hospitals were included in Tier 1.
“I can’t imagine that this wasn’t all done behind the scenes to purposely scuttle some hospitals,” Gusciora said. “I think that this calls for an investigation.”
Horizon officials responded to some of the criticism by saying that the status quo isn’t sustainable, and that the OMNIA plans will reach all New Jersey residents.
The plans will also meet a demand from consumers for more affordable coverage, according to the insurer, which covers 3.7 million of the state’s 8.9 million residents.
Horizon officials also contend that some critics are leaping to conclusions about the alliance before the company has even announced the details of the OMNIA plans.
Under the OMNIA plans, customers who choose to go to Tier 1 providers will pay lower out-of-pocket costs than those who go to Tier 2 providers.
For example, the State Health Benefits Program is planning to offer a tiered network plan, with preliminary details outlined on the state Department of Treasury website.
In the state’s tiered plan, the maximum out-of-pocket costs for members who go to Tier 1 providers would be $2,500 per year, compared with $4,500 for Tier 2, and $5,480 for other, non-tiered plans. In addition, monthly premiums would be 25 percent lower than non-tiered plans.
A Horizon official said that’s similar to, but not exactly the same as, the OMNIA plans.
[related]Sen. Joseph F. Vitale (D-Middlesex) said he’s not opposed to changing the status quo, but he wants more details from Horizon about how the changes will affect residents and the Tier 2 hospitals.
“It’s clear that the Tier 2 hospitals will no doubt suffer economic loss, loss of market share, and it has to have an effect on their financial well- being,” Vitale said.
Vitale is particularly concerned about the fate of Tier 2 hospitals that serve many low-income residents, known as “safety-net” hospitals. If their finances worsen, it could lead to them asking the state for funding.
“They’re going to lose the majority of whatever good payer mix they had,” Vitale said. “Payer mix” refers to the blend of different types of insurance that pay for healthcare services. Hospitals with the most privately insured patients are usually financially strong, while those with the fewest frequently struggle.
Vitale, chairman of the Senate Health, Human Services and Senior Citizens Committee, said Horizon should be concerned about this, since the insurer serves Medicaid recipients who rely on safety-net hospitals.
“No one argues that we can deliver the care better at a cheaper price, and we need to do that,” Vitale said, but he added that it shouldn’t be done in a way that makes healthcare access more difficult for some..
Vitale said he didn’t think Horizon intentionally “punished” the hospitals that it didn’t invite into Tier 1. But he said that some of the hospitals that agreed to be in Tier 1 must have calculated that they would receive more patients because their rivals wouldn’t be invited into the tier.
While Horizon officials emphasized that they sought high-quality hospitals committed to transforming the way they provide healthcare, Vitale noted that some of the hospitals that weren’t included also have good reputations.
Vitale added that he’s concerned that some Tier 2 hospitals could choose to leave the Horizon network if they lose many Horizon patients, allowing those hospitals to bill Horizon for large amounts of money.
“It could mean the insurance company is going to see out-of-network charges that they’re never seen before,” he said.
Healthcare observers interviewed yesterday raised other questions. One noted that the future of some Tier 2 hospitals may depend on how many Horizon patients they currently serve, and how many of those they lose because patients choose to go to a Tier 1 hospital. Another asked whether Horizon inadvertently weakened itself in the long run in exchange for short-term savings, by concentrating market power in the hands of a few large hospital systems.
Horizon spokesman Thomas Rubino said some observers are leaping to conclusions about the plans before they’ve even been released.
“Nearly all healthcare policy experts and economists agree that traditional, fee-for-service health care drives up healthcare costs and does little to improve the quality of care,” Rubino said.
Rubino noted that New Jersey has the fourth-highest healthcare costs in the nation.
“The new OMNIA Health plans will reach all New Jersey consumers – north, central, and south – as well as urban and suburban residents,” he said, adding that the tiered OMNIA plans will offer consumers a choice and that they will still be able to choose other Horizon plans.
Among those raising the most concerns were Assembly members Gusciora and Elizabeth Muoio (D-Hunterdon and Mercer).
Muoio noted that Mercer County would be left without a Tier 1 hospital that provides maternity services.
“If you have to drive 20 miles or more because you need to see your obstetrician, you won’t derive the same benefits as other people in the state,” she said, later adding: “This is essentially a unilateral decision from our state’s largest health insurer.”
Gusciora also expressed concern that two Mercer hospitals – St. Francis Medical Center in Trenton and Hopewell-based Capital Health System – weren’t included in Tier 1.
“This is an outrageously one-sided move by an insurance company to pick hospital winners and losers. There was no forewarning or transparency in this agreement, that will negatively affect the capital city’s largest non-governmental employer,” Gusciora said.
Some hospital executives feel that they were never given a real opportunity by Horizon to be included in Tier 1. Horizon appeared to choose as few hospitals as possible for Tier 1 while covering the state geographically. Hospitals and systems that accepted Horizon’s invitations to join the alliance were assured of more patients – and likely agreed to lower reimbursements.
St. Francis parent Trinity Health operates three non-Tier 1 hospitals, including Our Lady of Lourdes Medical Center in Camden and Lourdes Medical Center of Burlington County in Willingboro.
Trinity spokeswoman Kimberly Barnes said her system’s executives were concerned that the process to design the Tier 1 wasn’t open.
“We believe that we have a strong cost and quality profile,” and would have wanted to join Tier 1, she said. “We just believe that that’s what our business model is — it’s synergistic with our Catholic background and trying to be good stewards of the healthcare industry. We just want to make sure it’s a level playing field.”
Healthcare analysts expect that Horizon customers will gravitate to the OMNIA plans, although it may take years for them to do so.
Linda J. Schwimmer, vice president of the New Jersey Health Care Quality Institute, said it will be interesting to see what Aetna, the other State Health Benefits Plan insurer, does in response to the Horizon plan. For example, it could offer its own tiered plan, perhaps including hospitals that aren’t in Horizon’s Tier 1 in its own top tier.
Regardless of the details, state workers will have relatively little time –the month of October — to decide whether to switch plans.
The alliance member hospitals include Chilton Memorial Hospital in Pompton Plains; Clara Maass Medical Center in Belleville; Community Medical Center, Toms River; HackensackUMC at Pascack Valley; HackensackUMC Mountainside; Hackensack University Medical Center; Hackettstown Regional Medical Center (if acquisition by Atlantic Health System is completed); Hunterdon Medical Center; Inspira Medical Center in Elmer, Vineland, and Woodbury; and Jersey City Medical Center.
Also in the alliance are Monmouth Medical Center Southern Campus, Lakewood; Monmouth Medical Center, Long Branch; Morristown Memorial Hospital; Newark Beth Israel Medical Center; Newton Memorial Hospital; Overlook Hospital, Summit; Robert Wood Johnson University Hospital in Hamilton, New Brunswick, Rahway, and Somerset; and Saint Barnabas Medical Center, Livingston.
The hospitals that aren’t in the alliance but are in Tier 1 include AtlantiCare Regional Medical Centers in Atlantic City and Galloway; Bayshore Community Hospital, Holmdel; Cape Regional Medical Center, Cape May Court House; Cooper University Health Care in Camden; and Englewood Hospital and Medical Center.
Also included in that group are Ocean Medical Center; Jersey Shore University Medical Center, Neptune; Riverview Medical Center, Red Bank; Shore Memorial Hospital, Somers; Southern Ocean Medical Center, Manahawkin; St. Joseph’s Regional Medical Center; St. Joseph’s Wayne Hospital; and University Medical Center of Princeton at Plainsboro.
The hospitals included in Tier 2 (based on the latest available information) are Bayonne Hospital; Capital Health in Trenton and Hopewell; CentraState Medical Center in Freehold; East Orange General Hospital; Hoboken University Medical Center; Holy Name Hospital; JFK Medical Center, Edison; Kennedy Health System in Cherry Hill, Stratford, and Turnersville; Lourdes Medical Center of Burlington County, Willingboro; Meadowlands Hospital Medical Center, Secaucus; and Memorial Hospital of Salem County.
Also in Horizon’s Tier 2: Our Lady of Lourdes Medical Center, Camden; Raritan Bay Medical Center – Old Bridge and Perth Amboy; Saint Clare’s Hospital in Denville, Dover, and Sussex; Saint Michael’s Medical Center, Newark; Saint Peter’s University Hospital, New Brunswick; St. Francis Medical Center, Trenton; St. Luke’s Warren Hospital; St. Mary’s Hospital, Passaic; Trinitas Hospital, Elizabeth; University Hospital, Newark; Valley Hospital, Ridgewood; Virtua, Berlin, Marlton, Mount Holly, and Voorhees.
The hospitals outside of Horizon’s network are: Bergen Regional Medical Center, Paramus; CarePoint Christ Hospital in Jersey City; and Palisades Medical Center in North Bergen.