Six hospitals are suing Horizon, N.J.'s largest insurance company, to force their way into a competitive new plan called OMNIA.
TRENTON -- A group of hospitals suing Horizon Blue Cross Blue Shield of New Jersey for excluding them from a new line of discount health plans claims they have proof the insurance giant based its decision not on quality or cost, despite its marketing claims.
Horizon selected the largest hospital chains when it assembled the OMNIA tier 1 network to force "the most expensive network hospitals to moderate their prices," according to the latest version of the lawsuit, filed last week in state Superior Court in Bergen County.
Documents obtained through the discovery process revealed the six hospitals suing Horizon for relegating them to "tier 2" status met all of Horizon's patient safety and quality standards, according to the amended lawsuit. And because Horizon did not use any "pass or fail" score on quality measures, its choices were arbitrary, according to the complaint.
By Horizon labeling their hospitals "tier 2," their reputations suffered a blow, according to the lawsuit.
"Our hospitals satisfied their criteria to be tier 1," said Michael Furey, the attorney representing the six hospitals. The court has sealed the specific scores hospitals received so he said he could not discuss them specifically.
"Horizon led the public and state legislature to believe it was selecting the partners who were the best hospitals in the state based on quality, population health, and an attitude towards 'value-based health care,' " a payment strategy that rewards hospitals and doctors for keeping people healthy.
The documents have "confirmed some of our suspicions. The selection process. . . was flawed," he added. "The most overwhelming factor was the size of the hospitals systems."
Both sides say they won Horizon-hospital war
These six tier 2 hospitals - independent, city-based institution serving many low-income residents - sued Horizon in December for violating their contract that states Horizon must give them 60-days notice before any new insurance products are launched. Horizon officials announced the OMNIA plans on Sept. 10 without advanced notice.
Horizon spokesman Tom Vincz dismissed the hospitals' latest allegations and declined to address them.
"Like the original allegations, these too are baseless," Vincz said. "Horizon will continue to fight to lower the cost of healthcare for people who are being crushed by outrageous medical bills. We want to encourage, and not prevent, consumers from having greater control over their health costs."
Horizon has aggressively marketed the OMNIA plans as a less expensive and quality-focused product, and an answer to the spiraling cost of healthcare in New Jersey. The initial response has been strong: more than 234,000 people signed up in the first open enrollment period that ended in late 2015.
Consumers who buy OMNIA plans will pay 15 percent less in premium costs compared to other Horizon plans, and save potentially thousands of dollars more in copays and deductibles by using 36 "tier 1" hospitals and medical professionals, which have agreed to accept lower reimbursements in exchange for higher patient volume.
Consumers may use "tier 2" hospitals and doctors, but they will have higher co-pays and more out-of-pocket expenses. And with Horizon's marketplace clout serving 3.8 million members, many tier 2 hospitals have filed lawsuits, enlisted the backing of state lawmakers and waged publicity campaigns to force Horizon to offer them tier 1 status.
According to the amended lawsuit:
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Horizon began discussing OMNIA with insurance brokers and some future tier 1 hospitals in 2013;
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Horizon has instructed its tier 1 doctors they must refer 25 percent of their patients to Tier 1 hospitals.
The hospitals suing Horizon are Capital Health System in Trenton and Hopewell; Centrastate in Freehold; Holy Name in Teaneck; JFK Medical Center in Edison; Trinitas Regional Medical Center in Elizabeth and Valley Hospital in Ridgewood. St. Luke's Warren Hospital in Phillipsburg was among the plaintiffs but recently dropped out.