Judge Orders Horizon to Let Public See Details Behind OMNIA Insurance Plan

Horizon Blue Cross Blue Shield has fought to keep McKinsey report secret, but judge rules it is of ‘legitimate public interest.’ Horizon to appeal

After years of legal battles to keep the information private, Horizon Blue Cross Blue Shield might have to make public details of how it developed the OMNIA healthcare network as early as next week — exactly a month before the company is due back in court to again defend its thinking around New Jersey’s most popular tiered insurance plan. Horizon said late yesterday it would appeal the decision.

Bergen County Superior Court Judge Robert Contillo ruled on Tuesday that Horizon, the state’s largest health insurance provider, did not have the right to keep secret a 2014 report from business consultants at McKinsey & Company that Horizon used to craft the OMNIA network, which launched in 2016. Horizon, which insures some 3.8 million Garden State residents, had claimed that releasing the report would harm it in future negotiations with healthcare providers.

As a so-called tiered plan, OMNIA uses financial incentives to steer patients to a certain subset of its contracted providers. While all acute-care hospitals in the state are now part of the larger OMNIA network, the company designated some as Tier 1 facilities based on quality and other metrics, based in part on the McKinsey report. Many of these Tier 1 hospitals are part of an alliance that helped develop the concept, including some of the state’s largest, most powerful healthcare systems, and these facilities agreed to accept lower reimbursement rates from Horizon in exchange for the potential of higher patient volume. This group can also offer patient discounts on co-pays and other out-of pocket costs, an attractive lure given the cost of care.

This concept was challenged in late 2015, before it got off the ground, when seven hospital systems relegated to OMNIA’s Tier 2 — which don’t offer patients the same savings — filed a lawsuit alleging Horizon’s construction of the plan was improper and it unfairly relegated them to the less-favorable group, a status they said would harm their bottom line. Most of the original plaintiffs have since reached agreements with Horizon that added them to Tier 1 and dropped out of the litigation. One hospital system reached an agreement with the insurance company, which Horizon said is based on unrelated factors, that added them to Tier 1. The judge also dismissed some of the charges last month, and others over the years, but agreed to let one of the central claims alleged by the three community hospitals still in the suit to proceed to trial in mid-May.

Judge: ‘…no mere private dispute’

“There is broad, legitimate, immediate public interest in how health care is delivered in this State, how patients are insured, and how they are incentivized to be evaluated, tested and treated by particular providers,” Contillo wrote in his decision.

“Nothing I deal with in Chancery has a more immediate, acute public impact [than] these matters. This is no mere private dispute — it is infused with broad public impact and it is of legitimate public interest,” he continued. “The public interest extends to the mechanism by which the state’s largest insurer categorized its network partners, choosing some for preferred status in its value-based healthcare initiative.”

Horizon, which succeeded in getting several of the original charges dismissed, said it was disappointed the judge chose to unseal information that other court decisions have recognized was protected — documents the company said enable them to help consumers, including their current policyholders. (Horizon has until April 18 to appeal, or the McKinsey consultants’ documents will be available to the public through the court.)

“The company has always been clear and transparent about why it created OMNIA — to make high quality medical insurance more affordable to New Jersey families. Horizon respectfully disagrees with the Court’s ruling and plans to appeal this decision,” Horizon said.

Horizon officials have claimed the McKinsey report is a confidential product that, if released, would allow others to interfere with and take advantage of their business model. The OMNIA network was created using a fair, transparent process, the company has said, but has been unfairly targeted for criticism by a small group of providers. The plan itself has been a hit with customers, with more than 250,000 residents enrolling last year, many of whom were not able to afford coverage in the past.

While OMNIA’s rollout raised questions for some lawmakers about the process — and the impact on Tier 2 facilities in their districts — the state Department of Banking and Insurance, which was asked by the plaintiffs to review the plan’s creation, decided Horizon broke no laws; the court later confirmed this finding. Several other providers, including Aetna and AmeriHealth, have also launched tiered plans in New Jersey and healthcare experts anticipate these models, which are growing in popularity nationwide, will become more common here as patients, businesses, and public officials seek new options to reduce medical costs.

‘Smear campaign’

The remaining plaintiff hospitals — CentraState Medical Center, in Freehold, Holy Name Medical Center, in Teaneck, and Valley Hospital, in Ridgefield — have pressed forward in court and in public. The push included billboards put up in Bergen County early in 2016 that claimed Horizon didn’t care about patients and babies, an effort that ended after Horizon successfully challenged the tactic in court, calling it a “smear campaign.” Less than a month later, nuns and nurses from Tier 2 hospitals protested as political power players boarded an Amtrak train on their annual rolling junket to Washington, D.C.

But attorneys for these hospitals remain convinced that the McKinsey report is the key to Horizon’s OMNIA process, and they have doggedly pursued access to the document throughout the litigation. They lost the battle in the Appellate Division, but in July the State Supreme Court overturned the 2016 ruling and ordered Horizon to share the document, and communication around its development, with a handful of attorneys and top officials from the plaintiff hospitals. But these rulings declined to make it open to the public at large.

Michael Furey, an attorney with Day Pitney who represents the hospitals, said yesterday’s decision is important because it will allow anyone to review Horizon’s process. The media company that owns NJ.com, Advance Local Media, also joined the litigation to obtain access to the McKinsey report. The document, he said, presents a very different picture than what the insurance company has painted for the public and lawmakers.

“With Judge Contillo’s decision, the public should finally have an opportunity to learn the truth behind OMNIA,” he said. “If Horizon truly believes that healthcare is an important issue to the public, then it should stop its efforts to hide the documents that explain what happened and comply with the Court’s order directing their release.”