17 Hospitals Sue NJ Regulators to Block Horizon's OMNIA Plan

Seventeen NJ hospitals, led by the state’s former top insurance regulator, today sued to stop Horizon Blue Cross and Blue Shield of New Jersey from moving ahead with its OMNIA tiered network, which they say threatens their financial well-being because they were left out of the preferred tier.

Steven M. Goldman, who served as Commissioner of the Department of Banking of Insurance (DOBI) under former Governor Jon Corzine, filed the action against the agency he led from 2006 to 2009, saying that if DOBI does not rescind its approval of OMNIA by November 30, 2015, he will ask an appellate judge to do so before the plans take effect in January.

It’s the most serious action yet against Horizon’s high-profile effort to bring value-based care to New Jersey on a large scale. OMNIA combines a population health alliance in 6 major health systems (soon to be 5) and a physicians’ network that requires partners to make investments in technology and information sharing. The partners would contract to meet accountability measures that can result in shared savings. These steps have been tried in New Jersey, but not at the level seen in other parts of the country.

The tiered network—which is the part subject to DOBI’s approval—called for the OMNIA hospitals to agree to accept smaller reimbursements in exchange for having more patients routed their way. Consumers who signed up for OMNIA would pay lower premiums and have smaller out-of-pocket costs for using hospitals and physicians in the preferred tier. OMNIA subscribers could still use other hospitals that accept Horizon, but they would pay more.

From the start, Horizon has said OMNIA is needed to address New Jersey’s high health insurance costs, which are among the most expensive in the nation. The network is specifically aimed at the small group and individual markets, where Horizon has said consumers feel priced out of coverage.

But not all hospitals that accept Horizon were invited to participate in OMNIA, or even told about plan, until it was unveiled to the public on September 10, 2015. Goldman’s filing lists October 5, 2015, as the date when the hospitals learned about the plan during a Senate hearing. Horizon officials testified for 4 hours about the purpose of OMNIA and the broad criteria used to select members. Details on how specific hospitals were evaluated remain under wraps. Legislators criticized the lack of transparency and said Horizon's size and footprint in the New Jersey market meant OMNIA would reshape the healthcare landscape, to the detriment of those hospitals left out of the preferred tier, including many safety net hospitals. Horizon has 3.8 million members and covers more than 50% of the market.

Goldman’s language in the court document is harsh, considering he once worked with the officials who approved OMNIA. “Although cost savings is a worthy goal, DOBI improperly approved the OMNIA plan, which fails to comply with DOBI’s own regulations concerning network adequacy,” the filing states. “Making matters worse, DOBI utterly abdicated its responsibility to ensure that the OMNIA plan was not contrary to the public interest.”

Since the Senate hearing, an official with the Attorney General’s office has agreed to look into the approval process, and St. Peter’ Hospital in New Brunswick has a court date of December 17, 2015, to ask why it was not included in the preferred tier.

St. Peter’s action is aimed at Horizon—the action filed today says regulators failed to follow their own rules. Specifically, Goldman told reporters that OMNIA did not meet tests of network adequacy, and that DOBI failed to look out for the public when it let the plan to move forward.

In a phone call with reporters, Goldman said the OMNIA plan approved September 18, 2015, did not meet requirements for obstetric services in 2 counties or requirements for contracting with Level 1 and 2 trauma centers. In court documents, he described the plan as “rushed,” with most of the details being hammered out after September 3, 2015. Asked if he knew why this had occurred, Goldman said he did not, but that the case might bring reasons to light.

“Since Horizon first announced its OMNIA plan in September, Catholic hospitals in New Jersey have raised important questions about the network’s secretive criteria and the state’s inadequate oversight,” said Sister Patricia Codey, an attorney who is president of the Catholic HealthCare Partnership of New Jersey. She said OMNIA could ‘inflict economic harm” on hospitals not included in the preferred tier, which would be “devastating to Catholic hospitals and the patients they serve.”

Horizon issued a brief statement late yesterday, through its chief spokesman Thomas Rubino: “New Jersey has some of the highest health care costs in the nation and consumers are demand relief. It is unfortunate that these lawsuits aim to preserve the high-cost status quo in New Jersey, which is neither sustainable nor acceptable.”

DOBI did not comment. Previously, the department has said that OMNIA received a thorough review based on existing network adequacy regulations. Records show regulators required Horizon to expand the network to ensure statewide coverage and then further modified it to include obstetric services in one county. “As per its usual procedures, the department performed all of its required due diligence in a timely manner and treated this request for a tiered offering as it has treated all previous tiered offering applications,” DOBI spokesman Marshall McKnight said in early October.