N.J. lawmakers: Did Horizon stigmatize some hospitals?

By Susan K. Livio
March 08, 2016 at 7:20 AM, updated March 09, 2016 at 2:28 AM

TRENTON — Can a hospital labeled “tier 2” be first-rate?

That’s the basic question driving the legal battles over the OMNIA insurance plans Horizon Blue Cross Blue Shield of New Jersey began offering in January. It also helped fuel more than four hours of testimony at the Statehouse on Monday as lawmakers debated how the state should regulate cost-saving but option-limiting tiered networks.

Horizon made a deal with 36 of the largest hospitals that cuts their reimbursement rates but delivers more patients who will want to use these “Tier 1” facilities because it will cost them less. Consumers can still use about 32 other hospitals relegated to “tier 2” status, but they will have to pay more to so.

This “pejorative” title is likely hurting the public image of tier 2 hospitals, which warn OMNIA will ultimately drive hospital consolidations and even closures, said Senate Commerce Committee member Gerald Cardinale (R-Bergen).

State Sen. Joseph Vitale (D-Middlesex) agreed, calling it a “scarlet number.”

“The one of the biggest problems we have in New Jersey is the cost of health care. This tiering is one attempt to deal with this issue,” Cardinale said. “But there are tier 2 hospitals that are every bit as good as tier 1 hospitals, maybe better. Some folks are going to think they are substandard hospitals. Can we change the terminology?”

Ward Sanders, president of the New Jersey Association of Health Plans, an insurance industry group that includes Horizon, said he would “have a concern about rebranding this if it were confusing to the consumer.”

Tiered health plans are appealing options in a state with the second-highest health care costs behind New York, Sanders said. “Tiered health plans offer individuals and employers a new choice as they shop for coverage,” Sanders testified.

Sweeney to defend Horizon’s new health plans
A sneak peek at testimony the state Senate president will deliver Monday afternoon.

Consumers and the hospitals deserve to know how an insurance company decides which hospitals are in the preferred tier, Senate Commerce Committee Chairwoman Nia Gill (D-Essex) said.

“You can go into tier 1 hospital, but your doctor could be in tier 2 and you would have to pay a high copay to see your doctor. I think consumers and the doctors would want to know how you arrived at that conclusion,” Gill said.

Horizon executives won’t tell the tier 2 hospitals exactly why they didn’t get an invite, calling that information proprietary. Gill, Vitale, state Assemblyman Reed Gusciora (D-Mercer), and Assemblywoman and Elizabeth Maher Muoio (Mercer) sponsored a bill (S634) that would require these selection standards to be disclosed.

The bill would also require the state Health Department review and monitor the tiered networks to determine whether they provide an adequate number of hospitals and physicians. The Department of Banking and Insurance already has this responsibility.

Eric Boyce, the business manager for the Plumbers Local 24, urged the committee not to impose too much regulation on how tiered networks operate.

“As someone charged with managing health benefit plans, I want and need every possible tool available to me in my toolbox,” Boyce said. “What I do not want or need are government regulations restricting or eliminating access to quality, affordable healthcare options.”

Horizon officials have said they chose 22 of the 36 hospitals to be in the OMNIA Alliance tier 1 category because they were among the largest facilities or chain, scored well on patient safety, satisfaction and quality measures, offered a wide range of outpatient services, embraced a “value-based” payment model that rewards preventive care, and already serve a lot of Horizon members. The other 14 hospital shared some of these characteristics but were selected largely to meet geographic needs.

Two lawsuits brought by tier 2 hospitals are pending that would force Horizon to share a consultant’s report the company used to categorize hospitals into the two tiers.

State Senate President Stephen Sweeney (D-Gloucester) also testified, saying he will not support legislation that interferes with OMNIA or “threaten consumer choice.” He also vowed to work with Gill and Vitale on legislation that protects consumers by making tier criteria publicly available.