Horizon Blue Cross Blue Shield of New Jersey executives are aiming to head off the growing backlash against one of the insurer’s largest initiatives in recent years: the introduction of new tiered health plans, which designate certain hospitals and doctors for favorable pricing.
Since the recent announcement of the OMNIA Health Alliance – a group of hospitals and doctors that will form the core of the new plan’s top tier – it has come under attack from elected officials, particularly in areas of the state with few hospitals invited to join Tier 1.
Yesterday, a bevy of elected officials in Hudson County, including Jersey City Mayor Steven Fulop, U.S. Rep. Albio Sires (D-8th District), and Assembly Speaker Vincent Prieto, joined the ranks of those calling for delaying the tiered plans.
“Something has to be done,” said state Sen. Nicholas J. Sacco (D-Bergen and Hudson). “We cannot let this exist the way it is. We cannot let Horizon dictate in the state of New Jersey and (to) the people of New Jersey where they can be treated and where they can’t be treated.”
Critics of the plan have sketched out a nightmare scenario in which those insured by Horizon might abandon Tier 2 hospitals for the less expensive Tier 1 options, undermining the financial underpinnings of some Tier 2 institutions.
But Horizon executives say that scenario is built on a series of misconceptions.
They say the OMNIA Health Alliance was designed in response to demands for a lower-cost, more efficient healthcare system.
They contend that patients would still be able to visit Tier 2 hospitals at a similar cost to what they currently pay, that most Horizon customers will continue to visit the same providers, and that other insurers may strike similar cost-saving arrangements with Horizon’s Tier 2 hospitals.
“There’s a lot of misinformation about our intent and our approach here,” said Dr. Minalkumar Patel, Horizon senior vice president and chief strategy officer.
Patel said both businesses and individuals have been telling the company that their current healthcare costs aren’t sustainable.
Patel emphasized that the company isn’t reducing any options available to the company’s 3.8 million members – all of the hospitals currently in Horizon’s network will remain in-network, and other existing plans will continue to be available.
In addition, patients with tiered plans will be able to keep their doctors, even if they have to change hospitals to pay lower costs. In Hudson County, for example, 55 percent of doctors will be in Tier 1, Horizon representatives said.
Patel added that other insurers would likely provide a “channel” for Horizon’s Tier 2 hospitals to offer low-cost services.
That could happen for public workers in the State Health Benefits Program. While Horizon insures roughly 80 percent of those workers, another 20 percent are insured through Aetna. Aetna, which overs a total of 1.1 million people in the state, is expected to offer its own tiered plan through the SHBP.
Horizon representatives said that a tiered plan won’t be available this year to members of the School Employees’ Health Benefits Program. It also won’t be available to those who are insured through Horizon NJ Health, which manages health care for a portion of the state’s Medicaid recipients.
Patel said it would take time for people to migrate to the tiered plans. He noted that it has historically taken 10 years after the introduction of health maintenance organizations – another option that is based on alternative way of paying hospitals and doctors – for 25 to 30 percent of a plan’s members to move to HMOs.
These arguments may not sway the public officials opposed to the plan, with several Hudson County-based officials saying it would be unfair to make low-income residents travel to distant hospitals to save costs.
Sacco said Tier 2 hospitals “could essentially cease to exist insofar as the public employees are concerned.”
Hudson County Executive Thomas DeGise questioned whether the tiered plans will lead to a systematic shift of healthcare funding away from urban areas toward the suburbs.
“We shouldn’t be playing one hospital or one hospital group – one against the other,” DeGise said.
Hudson County Freeholder Anthony Romano was perhaps the most critical, calling the tiered plan “another dirty, underhanded trick.” He added that the opposition to the plan “has to be more than rhetoric — we have to stop this from happening.”
Prieto was more measured, saying that he’s taking a “wait-and-see approach.”
“It has to work in a way that we protect the safety-net hospitals and the anchor hospitals in these urban areas,” Prieto said, adding that those hospitals “can’t fail.”
The only government body that could put the brakes to the plan is the state Department of Banking and Insurance.
Fulop said approval from the Legislature should be required.
“I’d like to see the whole process slow down substantially,” Fulop said, later adding: “This is a big change and to kind-of feel like it’s being rushed through without proper oversight is concerning.”
Prominent institutions left out of Horizon’s Tier 1 include the Virtua system, which has hospitals in Evesham, Mount Holly, and Voorhees; the Valley Hospital in Ridgewood, and Holy Name Hospital in Teaneck. In Hudson County, only Jersey City Medical Center would be in Tier 1, while CarePoint Health’s Bayonne Hospital and Hoboken University Medical Center, as well as Meadowlands Hospital Medical Center are slated for Tier 2.
Coincidentally, CarePoint Health Christ Hospital in Jersey City — the location of the press conference where the Hudson County officials aired ed their concerns yesterday – won’t be affected by Horizon’s tiered plans. That’s because it’s outside of Horizon’s network. Palisades Medical Center in North Bergen is also outside of the network, but it could join if its proposed acquisition by Hackensack University Medical Center is completed.
A public hearing on the OMNIA Health Alliance is scheduled to be held by the Senate Commerce and Health, Human Services, and Senior Citizens committees on Oct. 5. Horizon executives said they plan to testify, while representatives of the state departments of Banking and Insurance, Health, and Human Services have been invited.