The Record- The state Insurance Commissioner on Monday refused to halt sales of OMNIA health plans by Horizon Blue Cross Blue Shield of New Jersey, saying it “would “immediately trigger chaos” in the health-insurance market. He denied a request filed Nov. 19 by 11 hospital systems.
Consumers already have started signing up for the plans, which offer lower premiums than other Horizon plans and lower cost-sharing if consumers seek care from preferred hospitals and doctors, according to the order by Richard J. Badolato, acting commissioner of the Department of Banking and Insurance.
Halting the plans’ sales “would cause significant disruption in the healthcare market, especially for those who have already chosen to enroll or are considering enrolling in a plan using the OMNIA network,” the order said.
Horizon is by far the largest health insurer in the state, providing coverage to 3.8 million people.
It has projected first-year enrollment of 250,000 in the new plans, which group healthcare providers into two tiers – preferred and non-preferred — as a way to provide lower-cost coverage. Providers in the preferred tier agree to lower reimbursements from Horizon in exchange for seeing more patients, and some of them have formed a partnership with Horizon to share the savings.
In northern New Jersey, Hackensack University Medical Center and its affiliated hospitals — Englewood Hospital Medical Center, HackensackUMC at Pascack Valley and HackensackUMC Mountainside — along with St. Joseph’s Healthcare System, are in the preferred, or Tier 1, network.
Holy Name Medical Center in Teaneck and The Valley Hospital are in Tier 2, where consumers would still have coverage, but with higher deductibles, coinsurance and copayments. They are among the 17 hospitals challenging the state’s approval of Horizon’s plan, which was announced on Sept. 10.
OMNIA plans are currently being sold to small businesses, government employees on the State Health Benefits Program, and individuals who buy their own coverage, including those who receive subsidies through federal marketplace for New Jersey set up by the Affordable Care Act. Coverage is set to begin at the first of the year.
In fact, one of Horizon’s OMNIA plans has been used as the base plan to calculate the subsidies provided to every New Jersey customer on healthcare.gov who receives a subsidy. If it is removed, subsidies for everyone buying in the federal marketplace would have to be recalculated. That would require emergency action by the federal Centers for Medicare and Medicaid, which runs the marketplace, Badolato’s order said.
The hospitals that had requested the “stay” in the state’s approval of the OMNIA plans now will take their case to the Appellate Division of state Superior Court, asking the court to reverse the state’s action, their attorney said. The hospitals all are non-profit institutions that were excluded from Horizon’s Tier 1, or preferred, network.
“Today’s decision… is disappointing but not surprising,” said Steven M. Goldman, the former insurance commissioner who is their lead counsel. “We intend to continue to pursue a stay of [the department’s] decision in the Appellate Division and correct what our clients believe to be a flawed process and network.”
The hospital group had argued that the state had “utterly abdicated” its responsibility to protect the public interest, because they said Horizon’s tiered-network plan threatens the financial viability of some Tier 2 hospitals, especially safety-net hospitals in urban areas. The loss of insured patients, who would choose to get their care at the preferred hospitals, would force some institutions to close, they said.
That possibility was “extremely remote,” Badolato wrote, and “such dire financial consequences are hyperbole at best.”
He dismissed other arguments that the network didn’t provide enough specialty services in obstetrics in all the geographic areas where its customers will live. After an appeal by Trenton-area lawmakers, the order said, the insurance department conducted a second, additional review of the network coverage and found it to be sufficient.
Tiered networks are common in New Jersey and the rest of the country, he said; the insurance department has approved 10 over the last five years. Horizon itself has sold coverage with a tiered network for the last two years, attracting about 3 percent of its customers, and no complaints have been received from consumers or from any hospitals, including those currently complaining, he said.
A legislative hearing about the impact of tiered insurance networks is to be held by two Assembly committees — Health and Senior Services and Regulatory Oversight —on Wednesday in Trenton.