The tiered coverage just introduced by the state’s biggest insurer has raised an outcry of concerns and questions — from hospitals, healthcare providers, and even potential patients. Ironically, the OMNIA Health Alliance from Horizon Blue Cross Blue Shield of New Jersey is being posited as an answer to the most important question of all: How much can insurance costs be cut in New Jersey?
The simple answer: a lot.
More precisely, a tiered plan will save roughly 23 percent on monthly premiums for public workers and their families who are members of the State Health Benefits Program. That is in addition to as much as $2,980 in annual out-of-pocket cost savings. The secret to the savings offered by the tiered plans is that people pay less if they receive healthcare from a select group of doctors and hospitals.
Horizon hasn’t announced the details of the OMNIA plans that it will offer to those who are insured through private-sector employers or the federally operated insurance marketplace. (New Jersey public employees could opt for tiered coverage starting yesterday.)
The fact that tiered plans offer significant savings has been so far lost in the debate over OMNIA. Most of the focus has been on complaints by hospitals left out of Horizon’s Tier 1.
Legislators and local politicians have questioned the transparency of the process used to set up the tiered plans. In response, Horizon officials have said that they will go further on Monday to detail how they designed the plans than any New Jersey insurer ever has.
In addition, public workers who were concerned that their local or preferred hospitals were left out of Horizon’s top tier were given another option yesterday, when Aetna made available its own Tier 1 for those in the State Health Benefits Program. It includes many hospitals that Horizon passed over, including the Virtua system in South Jersey; Trenton’s two hospitals, Capital Health and St. Francis Medical Center; and two Hudson County hospitals, Meadowlands Hospital Medical Center and Palisades Medical Center.
The OMNIA Health Alliance is a partnership between Horizon and six hospital systems, thousands of doctors affiliated with those hospitals, and Summit Medical Group, the state’s largest doctor-owned medical practice. These providers have agreed to shift some of their payments away from the volume of services they deliver and toward the “value” they deliver, as determined by various performance measurements. They also have agreed to be paid less per patient in return for a promise of receiving more Horizon referrals. Horizon will also share with providers all of their patients’ medical claims, which will give them a more complete picture of patient health and potentially improve treatment.
Horizon’s Tier 1 includes other hospitals, such as the Meridian Health system and Cooper University Health Care, in order to cover more of the state geographically.
Dudley Burdge, a senior staff representative for Communications Workers of America Local 1032, said the union believes that the tiered plans will be attractive to some workers.
“This is something we supported in concept,” he said. “It’s a way of getting a lower-cost option for folks, and obviously I would think it’s a much better alternative than a high-deductible plan, which just shifts the costs to our members.”
When Horizon makes its commercial OMNIA plans available as soon as next week, businesses are likely to be interested, according to Desmond Slattery, an insurance broker and the legislative committee chairman for the New Jersey Association of Health Underwriters.
“The biggest thing is that this is an option,” Slattery said, noting that employers generally prefer to give their workers a choice of plans.
[related] For example, workers who know they would like to continue to see a specialist who isn’t in OMNIA’s Tier 1 would be able to choose to pay more for a Tier 2 specialist, or choose another plan that does include the specialist at a lower cost.
“Jersey’s got the highest health insurance premiums in the country, so every year we’re trying to come up with new initiatives for our broker clients and this will certainly be in the mix,” Slattery said.
Slattery said Horizon and all other insurers that are working to reduce costs should be encouraged.
“The bigger picture here is that you have a carrier that’s coming out with a new innovative idea, how to hold down costs and increase quality — whether its from Aetna or from Horizon, I think that initiative should be applauded,” Slattery said, adding that he believes that the private market and not government is best positioned to hold down costs.
New Jersey Policy Perspective senior policy analyst Raymond J. Castro also focused on the potential benefit of the tiered health plans to lower costs.
“It has a lot of very positive potential and it deals with the three big issues of healthcare — affordability, access, and quality,” Castro said. Affordability, which Castro said is the biggest issue, is addressed through lower premiums; access is maintained by allowing patients to continue to go to Tier 2 hospitals and specialists; and quality is pursued through the use of value-based payments.
“I think there’s a lot more that the state can do,” Castro said. “This is a step in the right direction.”
But the changes are deeply unsettling to some workers, said Brian Hughes, Mercer County Executive. He’s heard from county workers who say they’ve had Horizon plans for 25 years and are torn over what to do to pay for lower costs.
“ ‘I have to choose a different plan or lose money,’ ” Hughes quoted one worker. “And I just don’t think that’s fair.”
Hughes emphasized that there are no Horizon Tier 1 hospitals in Mercer County that offer maternity, trauma, or cardiac services.
“A lot of people pick Blue Cross and Blue Shield early on in their careers and felt that the State Health Benefits Program would protect them and clearly they’re not. When it comes to healthcare, I think that the Department of Banking and Insurance should be making the rules and not the healthcare companies and it seems like we’ve gone the opposite way here,” Hughes said.
Hughes, who chose an Aetna plan more than 25 years ago and has stuck with it, doesn’t think it’s enough that Aetna includes the Mercer County hospitals in its Tier 1 that Horizon didn’t include. He also noted that public workers only have until the SHBP open enrollment period closes on November 2 to decide whether to switch plans.
Castro said he understands why there’s been an outcry over the OMNIA Health Alliance, which he noted was announced three weeks ago without warning.
“My concern has been there was very little or virtually no transparency in the process,” Castro said, adding that the state should take an active role in monitoring whether the OMNIA Health Alliance achieves the goals that it’s intended for, as well as how it affects the Tier 2 hospitals and doctors. This monitoring should include establishing a set of measurements that capture how the alliance is implemented, he said.
But Castro also said that a system that rewards quality performance will inevitably lead to “winners and losers.”
“I think that’s fine but that goes back to were these decisions made in a fair way,” he said.
According to Horizon spokesman Thomas Rubino,“We used many publicly available data points on quality, on consumer preference, and a number of other factors” that will be released next week, he said.
Rubino also said that Horizon executives agree with those who say that costs are the biggest concern for healthcare consumers. Specifically, he believes the tiered plan will draw state workers.
“The biggest and most benefit to SHBP members will be that they have plans that are up to 25 percent lower (in) premiums,” and have lower out-of-pocket costs, he said. “ so lower costs. “We think it’s a win-win .It’s an option that they get to make on their own, for their individual needs.”