Senate President Sweeney Weighs in on OMNIA Debate, Favors Tiered Network

Lilo H. Stainton | March 8, 2016 | Health Care
Safety-net hospitals remain worried that OMNIA advantages will have disastrous impact on their cash-strapped facilities

Stephen M. Sweeney (D-Gloucester), president of the state Senate
Horizon BlueCross BlueShield’s highly controversial tiered health-insurance plan once again took center stage at the statehouse Monday, as hospital officials and insurance executives packed legislative hearings and Democratic lawmakers squared off on opposite sides of the debate. While everyone agrees the model is an essential part of the future, some experts suggest the rancor over this product could still expand as additional elected officials step up to defend the interests of their local hospitals.

Senate President Stephen Sweeney (D-Gloucester) waded into the storm, testifying before the Senate Commerce committee in support for the OMNIA plan and the savings it can provide for customers — a position that sets him apart from several Democratic colleagues. Sweeney’s points were echoed by a number of business groups and unions, who urged the committee members to embrace what they said is a critical insurance option for a state with one of the nation’s highest healthcare costs.

“Senators, we are in a new world. The rising cost of healthcare in New Jersey … is killing customers, unions, and businesses,” Sweeney said. He urged colleagues who have been vocal critics of OMNIA to hold off on additional lawsuits and press events and “put the interests of customers first,” adding “too many times in this building there’s a tendency to respond to those who bang their pots and pans the loudest.”

Ray Castro, a healthcare expert with liberal-leaning New Jersey Policy Perspective, said Sweeney can provide a more objective perspective on the issue, in some ways. A longtime labor leader, Sweeney spent much of the past year working on a patient-centered healthcare pilot designed to bring down healthcare costs for state workers. “He’s in a position to see the forest through the trees,” Castro said, during a break from one hearing.

Safety-net providers concerned

Just an hour earlier and a few hundred yards down the hall, a half-dozen Democratic legislators gathered to reiterate their concerns about the new plan, which they say will have a disastrous impact on the small, struggling hospitals that serve poorer communities in their districts. They were joined by a handful of hospital leaders who faulted Horizon for creating the plan in secret and blamed state regulators for signing off on a product that they said will harm patients in the long run. The group said it is not opposed to tiered plans, but questions the process and larger impact related to OMNIA.

“This is primarily an issue of transparency and fairness,” said Assemblyman John Wisniewski (D-Middlesex), noting that the rollout of the two-tiered OMNIA plan, in January, has created confusion among providers and patients who are unsure how to access the best care under the plan. “These choices have unintended consequences of creating winners and losers in a system where we should not be doing that,” he added.

In a tiered plan, like OMNIA, the insurance company negotiates a lower reimbursement rate with certain healthcare providers to create a group, or “tier”, and then adds financial incentives for these hospitals to keep patients healthier. Some of the savings are passed on to customers through lower premiums; patients who chose to visit providers in the preferred group — or Tier 1, in OMNIA — can save even more on out-of-pocket costs.

Hospitals not included in customer-discounted Tier 1 are worried they will lose patients — and their insurance payments — to other facilities. For small, safety-net hospitals in poor communities this worry is magnified by the loss of revenue from other sources, like Charity Care payments, a shrinking pool of state and federal money used to help cover the costs of treating the uninsured.

[related]The lawmakers who joined Wisniewski Monday said they fear the tier trend, if not better regulated, will leave the most vulnerable residents without easy access to care. Sen. Raymond Lesniak and Assemblyman Jamel Holley (both D-Union), worried about the fate of Trinitas Regional Medical Center, a Tier 2 facility in Elizabeth. Assemblymembers Reed Gusciora and Elizabeth Mahar Muoio (both D-Mercer) raised concerns about the impact on Capital Health’s Trenton hospital. Sen. Loretta Weinberg (D-Bergen) shared a letter raising questions about how the tier structure was developed; Holy Name Hospital, in her hometown Teaneck, was also rated Tier 2. Several noted that OMNIA includes only one Catholic hospital statewide.

Castro, with NJPP, said we are likely to see more and more legislators speaking up on behalf of their local hospitals. “This development is likely to grow,” he said, adding, “it’s only a matter of time before we see the Tier 1 hospitals organizing.” In Sweeney’s home turf of South Jersey, the powerhouse medical facility is the Cooper Health System, in Camden — a Tier 1 hospital.

Ongoing battle over plan

The OMNIA plan quickly became controversial after it was rolled out in September and the model, which experts believe is an essential element in curbing healthcare costs in the future, has sparked legal action from both sides. Some hospitals filed a lawsuit against Horizon and launched a negative advertising campaign about OMNIA; in February, Horizon filed a counter suit to block what they called the slanderous messages.

Another group of Tier 2 hospitals challenged the state Division of Banking and Insurance approval of the product and on Monday, the Medical Society of New Jersey, which represents doctors in both tiers, said it would file an amicus brief in this case in an effort to ensure greater transparency in the future. Sen. Nia Gill (D-Essex) and Sen. Joseph Vitale (D-Middlesex), who led the investigation into OMNIA through a series of hearings last fall, had requested that the state Attorney General’s Office also examine the DOBI decision. On Friday the attorney general’s office issued a letter stating that the OMNIA plan broke no state laws.

But the attorney general’s response didn’t placate some hospital leaders concerned about the OMNIA plan. “Should we live by outdated regulations or by moral and ethical principles embedded at the core of our beliefs,” asked Sister Patricia Codey, who leads a network of Catholic hospitals, challenging the attorney general’s findings. “Shouldn’t DOBI do better?”

Improving the state’s regulatory oversight is one of the goals set out in legislation introduced by Vitale and Gill, the Commerce Committee chair. They offered a trio of bills to improve transparency and disclosure around tiered networks, ensure any network provides adequate options for patients, and protect state employees enrolled in OMNIA against surprise charges. Wisniewski said he would also introduce legislation with similar goals, plus a measure to halt enrollment in OMNIA temporarily; similar versions of some bills are also being heard in the Assembly.

“I think we all agree that New Jersey residents deserve affordable, quality health care and that they should have access to the providers they believe best meet their needs,” Gill said after the hearing. “Tiered Networks are here to stay and play a role in the new healthcare landscape in New Jersey,” she said, adding, ”As we have learned over the past six months, tiered networks will drastically change the delivery and financing of healthcare for New Jersey’s consumers.”