Seven hospitals on Thursday launched the latest legal challenge in New Jersey to Horizon Healthcare’s new tiered coverage program, contending Horizon breached in-network contracts.
Capital Health System Inc., CentraState Medical Center Inc. and other hospitals behind Thursday’s suit in Bergen County Superior Court argue that, under the network agreements they signed with Horizon Healthcare Services Inc., they should have received at least 60 days notice of the insurer’s Omnia Health Alliance and the criteria that it was using to determine preferred tier facilities for the program’s plans. According to the hospitals, they should have had the chance to demonstrate that they meet the standards for Tier 1 status.
Framing Omnia as a response to rising health care costs, Horizon, the state’s largest health insurer, has said that consumers with Omnia plans will see lower out-of-pocket costs when they use Tier 1 facilities. However, lower-tier hospitals, including all those suing Horizon in Bergen County, have attacked the fairness of their designations and raised fears about the financial implications if patients go elsewhere for services.
Capital Health System and its allies noted that Horizon, which holds 50 percent of the market for commercial health insurance in New Jersey and provides coverage to about 3.8 million people in the state, has been heavily promoting Omnia.
In the Complaint the seven hospitals say: “On almost a daily basis since Horizon’s initial proclamation of the arrival of Omnia and the alliance, the hospitals have been confronted with questions and comments from patients expressing concerns that the hospitals are somehow inferior to Tier 1 hospitals and from physicians noting that, once Omnia is effective, they will be compelled to refer patients to Tier 1 hospitals because of the powerful cost incentives favoring Tier 1 hospitals,” Thursday’s suit said.
“If Horizon is permitted to continue on its current course, the damage to the hospitals will be significant and largely irreparable,” the Complaint added.
The hospitals are calling on the court to require Horizon to negotiate with them regarding Tier 1 status and block the insurer from suggesting in marketing or advertising efforts that Tier 1 hospitals provide better, higher-value or lower-cost health care than Tier 2 hospitals.
The other hospitals in Thursday’s suit are Holy Name Medical Center Inc., The Community Hospital Group Inc., which operates as JFK Medical Center, St. Luke’s Warren Hospital Inc., Trinitas Regional Medical Center, and The Valley Hospital Inc.
The suit adds another front in the legal and legislative war over Omnia, which was announced in September. The plans have an effective date of Dec. 26 for certain public employee members and Jan. 1 for all other members.
A coalition of Tier 2 hospitals, including plaintiffs in the Bergen County suit, are contesting the New Jersey Department of Banking and Insurance’s approval of Omnia with the state Appellate Division, while St. Peter’s University Hospital Inc. has separately hit Horizon with a breach-of-contract suit in Middlesex County Superior Court for failing to provide advance notice or giving the hospital a chance to apply for Tier 1 status.
Lawmakers have also tried to block Horizon’s implementation of the Omnia plans.
On Dec. 7, state Sens. Nia Gill, D-Essex, and Joseph Vitale, D-Middlesex, unveiled a four-bill package that would freeze the implementation of any tiered health insurance plans that have been offered this year until Jan. 1, 2017, and impose other new requirements on the creation and administrative review of such plans.