Elected Officials Move to Block OMNIA, Citing Fears About Hospital Closures

Andrew Kitchenman | September 18, 2015 | Health Care
Horizon Blue Cross Blue Shield calls concerns a ‘misunderstanding’ of how plans will work, ask for time to roll out details

Vincent Costantino (left), St. Francis’ chief administrative officer and Al Maghazehe, Capital Health president and CEO
Concerns about whether New Jersey’s largest insurer’s move to tiered health plans will lead to hospital closures has led legislators and local officials to call on the state to block those plans.

Horizon Blue Cross Blue Shield of New Jersey recently announced the OMNIA Health Alliance and said it would soon offer plans in which patients would pay less to visit alliance providers and a select group of other providers known as “Tier 1.”

Patients who are in these plans who visit other providers, known as “Tier 2,” would pay more out of pocket.

But some Tier 2 hospitals worry that Horizon’s plan could mean far fewer patients and could ultimately force them to shut their doors.

In response, Horizon executives said that this fear is based on a “misunderstanding” of the plans. They say that Horizon members will be able to keep their current plans or opt to pay more to go to Tier 2 hospitals.

They did not address the possibility that even if the movement from current plans to Tier 1 hospitals take several years, it could just delay the problem for Tier 2 hospitals.

Whether the critics or the insurer are correct may depend on how Horizon’s customers respond to the plans once they’re offered. If, as the Tier 2 hospitals fear, there is a rush of patients toward the tiered plans and the Tier 1 hospitals, some institutions with narrow operating margins may be pushed to the brink. However, if Horizon executives are right, thee will only be a gradual move toward the tiered plans and no immediate crisis for Tier 2 hospitals.

The stakes are high, since Horizon provides health coverage to roughly 43 percent of New Jerseyans, by far the highest of any insurer.

Letter calls for delay

In a joint letter to Acting Commissioner of Banking and Insurance Richard J. Badolato, four elected officials in Mercer County requested that he place the implementation of the OMNIA plans on hold.

“We believe there was neither transparency nor public airing of this plan, which will have detrimental consequences for thousands of injured persons and their families,” wrote Assemblyman Reed Gusciora (D-Hunterdon and Mercer), Assemblywoman Elizabeth Muoio (D-Hunterdon and Mercer), Trenton Mayor Eric Jackson, and Mercer County Executive Brian Hughes.

They ask that Horizon provide them (through the Department of Banking and Insurance) with more information on the criteria and standards it used to select the Tier 1 hospitals. They want to know if the process was equitable to all stakeholders; considered the effect on consumer access to care; and evaluated the ability of Tier 2 hospitals “to remain viable and stable healthcare providers.”

Gusciora expressed concern that Hopewell-based Capital Health System and St. Francis Medical Center in Trenton weren’t in Tier 1, and that legislators had no notice that the change was coming.

“I don’t think is a way to do business for a nonprofit in this state, that supposedly cares about its insured, not to include the two capital city hospitals, not to include legislators, and not to have any kind of public airing,” he said.

Muoio noted that many public workers will be entering an open-enrollment period in which they can switch their health plans on October 1, but they don’t have details about the tiered OMNIA plans.

“My concern is that our residents have access to quality, affordable healthcare,” she said. “This is going to be the most affordable product that our largest insurer in the state is offering, and yet it will not be readily accessible to some of our areas that are most in need of services. The result will be the opposite of what appears to be the intention of this new plan.”

Concerns about access to care

Hughes and Jackson both expressed concern that Trenton residents would have difficulty getting to Tier 1 hospital for critical services like maternity (offered by Capital Health) and cardiac care (offered by St. Francis).

Capital Health President and CEO Al Maghazehe said his hospital didn’t know that the OMNIA Alliance was going to work out as it has and asked for all hospitals to have a “fair shot” of participating in OMNIA.

“Quite frankly, I don’t know how Horizon expects women that are pregnant and have a relationship with their doctors to all of a sudden interrupt that relationship and travel 15 miles, 10 miles, whatever it takes, to go to a Tier 1 hospital,” he said.

St. Francis Chief Administrative Officer Vincent Costantino noted that his hospital was recently recognized by Horizon for being a top-performing hospital. He said the hospital was “shut out” by the insurer.

“Horizon’s decision also threatens the hospital viability,” he said. “You know, we rely on every dollar to support our mission and clearly the millions of dollars that are part of the Horizon existing contracts are at risk if there’s migration” of customers to the tiered plan.

Horizon executives responded that Horizon members would have a choice about whether to stay in their current health plans or to switch to tiered plans – and they predict that most wouldn’t switch over the next year.

Horizon Senior Vice President for Healthcare Management Kevin P. Conlin said the company is in the second step of a three-part process. The first step was announcing the OMNIA Health Alliance, the current step involves talking with policymakers, hospital executives, doctors, and Horizon members about the alliance, and the third step – to occur in early October – will involve releasing details of the tiered plans.

“We very much look forward to speaking with the authors of the letter,” Conlin said, adding that the letter writers misunderstood three “key factors”:

1. That the tiered plans would be the same as a “narrow network” — a term for health plans that only cover services at a limited range of hospitals. In fact, Conlin said, while Tier 1 providers would mean lower out-of-pocket costs, members would still be covered at Tier 2 providers.

2. That all Horizon members would move to the OMNIA plans next year. “We expect that most of our members will continue to access a broad-access product,” Conlin said, referring to non-tiered plans.

3. That access to care will be “fundamentally damaged.” To the contrary, Conlin said, the combination of continuing to offer the current plans and covering all hospitals in the tiered plans would maintain access.

While Conlin said he couldn’t provide details about how Tier 2 costs would compare with the current, non-tiered plan costs, he did say the benefits would be “similar.” The new approach is a shift from a focus on providing the maximum amount of services to a focus on keeping patients healthy, by having insurers pay providers based on various measurements of quality and their ability to keep costs down.

Conlin said that current Horizon members who aren’t in OMNIA plans but who use OMNIA hospitals would benefit from the new approach that these hospitals are taking to how they deliver healthcare. But they wouldn’t see any financial benefit unless they switch to an OMNIA plan – Horizon will pay hospitals different amounts depending on what plan a patient has.

Gusciora also expressed concern that out-of-state hospitals used by some New Jerseyans with conditions like cancer — such as Memorial Sloan Kettering Cancer Center in New York and the Hospital of the University of Pennsylvania — would become out-of-network for residents who are in the tiered plans. Conlin responded by saying that these hospitals would remain in-network for many of the non-tiered plans, and that patients in the tiered plans could use out-of-state hospitals (with Tier 1-level payments) if it was medically necessary for services that they uniquely offer.

The letter to the state wasn’t the only action regarding the OMNIA Health Alliance yesterday. Senate Health, Human Services, and Senior Citizens Committee Chairman Joseph F. Vitale and Senate Commerce Committee Chairwoman Nia H. Gill announced yesterday they would hold a joint hearing on the alliance and its impact “in the coming weeks.”