Officials at a handful of hospitals will finally get to review a confidential consultant’s report and other documents they claim are at the heart of Horizon Blue Cross Blue Shield’s alleged plan to exclude them from a preferable insurance network under the company’s OMNIA health plan.
On Monday the New Jersey Supreme Court granted four hospitals access to the McKinsey & Co. report, overturning an Appellate Court decision from June 2016 supporting Horizon’s claims that the materials were “irrelevant and confidential.” The top court noted that justice is better served when “all the available facts” are disclosed and suggested that trial judges had already outlined sufficient provisions to protect Horizon.
The plaintiff hospitals have insisted all along that the May 2014 consultant report was a critical tool in Horizon’s process to develop the OMNIA plan and assign providers to its two “tiers,” or networks, which offer discounts to patients who visit hospitals and providers in the Tier 1 category.
Tiered, a growing trend
Tiered plans have become a growing trend as insurance companies look for new ways to hold down the growing costs of healthcare; as of February, some 250,000 Garden State residents had enrolled in OMNIA.
Representatives for these hospitals welcomed the latest court decision Monday, which they said allows them to prove that they were improperly relegated to Tier 2, a status they claim violated their contract with Horizon and could discourage patients from using their facilities.
Horizon maintains that tier status was determined through multiple criteria that reflect a hospital’s ability to work with them to provide more efficient, effective care — or “value-based” care — and is not simply a statement of quality. A spokesman suggested Monday that the long-awaited report won’t reveal many surprises either.
But attorney Michael K. Furey, who represents three of the plaintiff hospitals — CentraState Medical Center in Freehold, Holy Name Medical Center in Teaneck, and Valley Hospital in Ridgewood — disagreed. “This information will show that Horizon knew the harmful consequences of its tiered ranking system to Tier 2 hospitals before the selection process was completed and whether OMNIA is the value-based care program Horizon has trumpeted to the world,” he said.
These facilities are part of an original group of seven hospital systems — including 17 facilities — that filed suit against Horizon, the state’s largest health insurance company, with some 3.8 million members, a month after the insurer released its OMNIA plan in October 2015. Several of these systems have since reached agreements with Horizon.
Along the way, the plaintiffs led highly visible protests and commissioned a handful of anti-OMNIA billboards at key intersections in north Jersey. The hospital group also challenged the process used by the New Jersey Department of Banking and Insurance to approve the plan, but the court upheld the state’s rollout last summer.
The decision was also welcomed by Saint Peter’s University Hospital, in New Brunswick, which filed a separate, but similar, lawsuit. “Saint Peter’s strongly believes it qualifies for the highest tier in any tiered network on the basis of cost and quality, and looks forward to proving that in court,” said interim CEO and president Leslie D. Hirsch.
Downplaying the ruling
Horizon officials downplayed the ruling Monday, calling it a procedural decision that doesn’t speak to the merits of their defense, and insisted the company will prevail in the end. The plaintiff hospitals are pursuing a costly “fishing expedition” over details that have little to do with the case, they said.
“The hospitals suing to block OMNIA might be disappointed to discover — after almost two years of litigation so far — that the company … simply developed a lower-cost, high-quality product that is fully consistent with the objectives of the Affordable Care Act,” said Horizon spokesman Kevin McArdle. OMNIA includes some 70,000 previously uninsured state residents, he said, and the focus should be on protecting their care — not dismantling a popular insurance product.
“We continue to urge this small handful of hospitals to follow the lead of the hospitals that dropped out of this lawsuit and work with Horizon policyholders — not against them,” McArdle noted.
Reading the McKinsey report
But Monday’s opinion makes that less likely. Judge Clarkson Fisher, who has been temporarily assigned to the case, wrote that these hospitals should be able to review an unredacted version of the McKinsey report.
Trial court judges were correct in determining “that discovery geared toward unmasking Horizon’s methodology and particular determinations during the selection process, as well as other information illuminative of Horizon’s acts and intentions, was relevant to plaintiffs’” legal claims, he said.
In addition, Fisher said the confidentiality order and other restrictions — including limiting document review to attorneys and top company executives — put in place by the trial court would be sufficient to protect Horizon’s proprietary information.
He also criticized the Appellate Division for considering the merits of the plaintiffs’ case — which “rest[ed] on the slenderest of reeds” — in reversing the trial court’s decision to allow access to the McKinsey report.
“The Appellate Division’s published opinion and later unpublished orders is driven by the familiar abuse-of-discretion standard applicable when appellate courts review discovery orders: appellate courts are not to intervene but will instead defer to the trail judge’s discovery ruling, absent an abuse of discretion or a judge’s misunderstanding or misapplication of the law,” Fisher wrote.
He continued, quoting from a 1976 case, “our court system has long been committed to the view that essential justice is better achieved when there has been full disclosure so that the parties [may become] conversant with all the available facts.”