Will Christie Administration Reverse Stance on OMNIA Insurance Plan?

Andrew Kitchenman | December 8, 2015 | Health Care
Legislation seeking to block Horizon’s tiered health coverage could hit governor’s desk within weeks

Credit: NJTV
State Sen. Nia Gill (D-Essex)
So far, Gov. Chris Christie has stayed out of the fight over Horizon Blue Cross Blue Shield of New Jersey’s controversial OMNIA tiered health plan. But he may not be able to keep his distance much longer.

A package of four bills that would block or radically modify OMNIA — and other tiered health plans — could come up for a vote in the Legislature as early as December 17, just ahead of OMNIA’s planned launch.

But Christie will still need to sign the legislation. And that may not happen, given that the administration recently approved the launch of the tiered health plan, in which patients pay less out of pocket if they visit preferred doctors and hospitals that are designated as “Tier 1.”

It could get ugly. Sen. Joseph F. Vitale (D-Middlesex), one of the sponsors of the package, has made his opinion clear:

“Horizon has misled the government and healthcare consumers, and this will provide an opportunity to reset this process and allow consumers to enroll in other plans in the short term,” Vitale said. That would “allow policymakers and regulators to repair, or reinvent, or completely scrap the OMNIA model.”

Vitale said he was hopeful that Christie would sign all four bills.

The four bills, cosponsored by Sen. Nia H. Gill (D-Essex and Passaic) would revise how plans like OMNIA are designed and approved.

One measure would halt any new tiered plans for one year, until January 1, 2017, and allow consumers who already chose one of these plans to select another.

The other bills include one intended to add transparency to the process by which hospitals and doctors are chosen for preferred tiers, another that would prevent state officials from approving incomplete tiered plans and a third that would establish minimum benefits offered by tiered plans — one of which is requiring University Hospital in Newark to be included in preferred tiers.

For Christie to sign the bills at the 11th hour , however, would require him to effectively reverse OMNIA’s approval, which Department of Banking and Insurance officials issued in September. State officials have said that they applied the appropriate legal standards in reviewing the insurance networks included by Horizon in OMNIA. Banking and Insurance Acting Commissioner Richard J. Badolato reinforced this position in a recent 40-page order rejecting an appeal by 17 Tier 2 hospitals asking him to block the launch.

Since Horizon executives announced OMNIA in September, hospitals and doctors left outside of Tier 1 have expressed concern that the plan would lead to them losing patients. That, in turn, could lead to the closure of Tier 2 hospitals, critics say, and the sale of Tier 2 medical practices to Tier 1 hospitals,.

Most Horizon patients are expected not to shift to a tiered plan; thus, all out-of-pocket costs are the same for all in-network providers.

Horizon executives, as well as insurance brokers that help employers buy insurance, have promoted the idea that there will be significant cost benefits to the OMNIA plan. Healthcare providers have an incentive to accept lower payments in tiered plans like OMNIA because they are guaranteed more patients.

OMNIA critics have noted that Horizon executives didn’t tell providers how they chose Tier 1 providers, and the company hasn’t disclosed many details, citing the information as confidential. Horizon indicates that it has gone public with more information about the design than other insurers with tiered networks.

Gill has expressed disappointment with how state officials handled the OMNIA application. When questioned whether asking Christie to sign the bills would amount to him to effectively rebuking his own administration, Gill instead described the measures as a way for the state to protect patients.

“We’re hopeful that he would sign the bills because they would be viewed as strengthening consumer protection and adding transparency to this very fluid and innovative marketplace,” Gill said.

The bill that would add transparency to the process insurers use to design tiered networks would also prevent insurers from limiting the number of providers that could participate. Vitale said

“Horizon touts this as (promoting) population health, but it’s not the true definition,” Vitale said. “They’re redefined it to suit their own goals.”

Gill added that it’s vitally important to include University Hospital, which is located less than a mile from her district, in any preferred tier. The hospital is the only one in the state that is owned by the state government. It’s also one of three hospitals that serve as the highest-level trauma centers, and is a center for training new doctors.

While it’s too early to tell how Christie will respond to the proposals, at least one Republican senator said she’s willing to consider the legislation. Sen. Diane B. Allen (R-Burlington) said she was particularly interested in the one-year moratorium, which would allow state legislators and officials more time to review OMNIA.

“I feel that we need to change where we’re going with tiering hospitals inappropriately for money considerations, it would appear, and not because of how good they are, or anything else,” Allen said. “That, to me, is wrong.”

Allen also expressed support for a provision of one of the bills that would bar insurers from including some services in a hospital as Tier 1, while leaving the rest of the hospital in Tier 2. Horizon has done this in Burlington County, in which it’s included obstetrics at Virtua Memorial Hospital in Mount Holly in Tier 1, while excluding the rest of the hospital. This step was necessary in order to receive state approval of the plan, which otherwise would have left a gap in Tier 1 obstetrics in the county.

“I completely feel that (Vitale and Gills are) trying to do is where we need to be,” Allen said of the provision, adding that dividing a hospital’s services is “absurd.”

Meanwhile, an appeals court rejected a request by lawyer Steven M. Goldman on behalf of 17 hospitals to temporarily block OMNIA. The court did grant an expedited hearing on the lawsuit, which contends that state officials didn’t follow their own regulations in approving the plan.

Horizon spokesman Thomas Rubino said in a statement that company executives are pleased that the court “denied yet another attack on Horizon’s efforts to offer a high quality, low-cost health plan for New Jersey consumers who are getting crushed by healthcare costs.”

Horizon has estimated that 40,000 currently uninsured residents would be enticed by the prices to enroll in OMNIA through the federal insurance marketplace.

“Any effort to deny thousands of uninsured New Jersey families their ability to purchase insurance for the first time in their lives during the holiday season is reckless and wrong,” Rubino said. “Opponents of change continue to ignore a very basic reality: the status quo in New Jersey is not sustainable for our state’s small businesses, consumers, and taxpayers.”

Saint Peter’s University Hospital in New Brunswick also filed a lawsuit. It alleges that Horizon didn’t fulfill its contract with St. Peter’s by not including it in Tier 1. St. Peter’s executives say the contract requires it to be a part of any Horizon network that it met the criteria for. A hearing in that case is set for December 17.

The OMNIA plan offered through the State Health Benefit Program will launch on December 26, while the plans offered through employers and the individual marketplace will start on January 1.