Highlight on New Jersey: OMNIA plan tiers and fears

Horizon Blue Cross Blue Shield of New Jersey is trying to change the commercial health care market in New Jersey with a product called the OMNIA Health Plan. With a tiered provider network model, Horizon plans to use the OMNIA plan to reward patients who choose top-tier providers with cheaper deductibles and copays. In large part due to the manner in which Horizon has selected which providers belong to which tiers, smaller (lower-tiered) providers are objecting to the plan, noting that it will drive smaller providers and competition out of the industry.

Tiers

The plan relies upon a two-tiered provider model. The highest tier—Tier 1—includes 34 hospitals and the state’s biggest health care changes. Tier 2 is comprised of smaller providers, free-standing, and Roman Catholic providers. While members of the OMNIA plan can select either type of provider, subscribers who go to a Tier 1 facility are rewarded with lower copays and deductibles. Horizon’s tiered-approach is saving on costs and, as a result, the OMNIA plan is 15 percent cheaper than Horizon’s traditional plans.

Challenges

Although the New Jersey Department of Banking and Insurance agreed in September 2015, to allow the OMNIA plan to launch in November 2016, Horizon is feeling pressure from lawmakers and providers. Lawmakers announced concerns that the plan was being rushed and was not adequately vetted. Additionally 17 of the Tier 2 hospitals sued the state banking regulators in November 2015, to block the plan. The Tier 2 hospitals alleged that the Department of Banking and Insurance approved the plan before making sure OMNIA met state requirements. Subsequently, additional hospitals sued Horizon, alleging that the insurer breached in-network provider contracts by moving hospitals to lower tiers without adequate notice.

Status

As of March 2016, an internal investigation by the New Jersey attorney general concluded that Horizon broke no state laws in creating OMNIA. Additionally, 234,000 people enrolled in OMNIA. Many of OMNIA’s enrollees—41,000—were previously uninsured.

Additional opposition

In addition to provider and lawmaker opposition, physician organizations have joined the battle against Horizon’s OMNIA. Physicians are objecting to the way Horizon requires that physicians—under threat of penalty—explain to patients that they can save money by using Tier 1 providers. If physicians do not explain the cost sharing benefits of the network to patients, physicians risk being terminated from Horizon’s Blue Cross Blue Shield of New Jersey networks. One physician group, The Medical Society of New Jersey, filed an amicus brief in support of the 17 Tier 2 hospitals challenging the Department of Banking and Insurance decision to approve the OMNIA plan.

Transparency

A key issue in the OMNIA litigation is transparency surrounding the formula used to develop the two-tiered system. While the plaintiffs’ attorneys have seen the formula, the insurer’s method remains cloaked behind protective court orders. Horizon argues that the formula behind OMNIA is proprietary and essential to the insurer’s competitive advantage. Although the formula has not been made public, opponents have obtained some favorable court treatment. For example, a state court ruled that Horizon had to disclose a financial impact analysis the insurer conducted on the effects that the OMNIA plan will have on Tier 2 hospitals.