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.

Is there a better way than the ACA? Hearing asks experts

Lawmakers considered health care reforms to improve pre-existing condition protections, lower patient costs, and encourage plan innovation at a hearing held by the House Committee on Energy and Commerce, Subcommittee on Health. The hearing included testimony from health reform experts on the ways the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) has aided or hindered the advancement of health care and experts offered recommendations for how the health reform law can be advanced or altered to improve the industry.

ACA improvements

Sabrina Corlette, a research professor and project director at Georgetown University, testified that while the ACA has led to significant improvements in access to care and health insurance coverage, now, six years beyond the law’s enactment, lawmakers have new opportunities to further the ACA’s reach and strengthen its benefits. Corlette acknowledged that the ACA is not a perfect law and suggested that lawmakers improve upon it by: (1) providing incentives for the remaining non-expansion states to expand Medicaid; (2) fix the glitch that prevents working families from obtaining marketplace credits; (3) improve affordability because, for many low- and moderate-income individuals, insurance costs remain out of reach; (4) support outreach and enrollment efforts; and (5) improve the marketplace shopping experience.

Trends

More dramatic steps need to be taken to improve consumer choice and shrink rising costs, according to the testimony of Scott Gottlieb, resident Fellow at the American Enterprise Institute. Gottlieb pointed to alarming trends in the health insurance market, like narrowing provider network, shrinking drug formularies, increases in mandated costs for insurers, more limited tools to manage actuarial risk, provider consolidation, inefficient care, and limited economic accessibility of coverage purchased outside of employer relationships.

Improvements

Many of these problems could be alleviated, according to Gottlieb, if regulatory standards were better designed to encourage innovative plan designs. He warned that the marketplace’s current tier and formula restrictions are too narrow to allow for bottom up approaches to plan design that could lead to novel and cost saving coverage. Gottlieb noted that the tiered approach, while helpful from a consumer plan selection point of view, has served to hinder advancement of plan design by forcing insurers into narrow design corridors. He also suggested that CMS move away from mandates and towards incentives as a means to get people into the insurance market.

Flawed design

The ACA is also responsible for dramatic increases in the cost of individually-purchased health care, according to the testimony of Avik Roy, Senior Fellow at the Manhattan Institute. Roy testified that while the ACA reduced the number of Americans who are uninsured, it has fallen short of coverage projections and exacerbated other problems. To improve upon what he called the ACA’s “flawed design,” Roy recommended a transition away from ACA models towards a non-group health insurance market which would: (1) give patients control of health care dollars; (2) make premiums more affordable for young and healthy enrollees; (3) enable voluntary participation; (4) provide affordable premiums and guaranteed coverage for individuals with pre-existing conditions; and (5) streamline tax credits.

Highlight on New Mexico: New health Secretary has several issues on her plate

The New Mexico Department of Health is undergoing some changes, making important decisions, and overrun with its workload. The new Secretary of Health must figure out how the agency will manage its large load of applications for medical marijuana approval and ensure that providers continue to accept the state’s growing number of Medicaid beneficiaries.

A new leader

New Mexico has a new Secretary for the state Department of Health. Governor Susana Martinez recently appointed Lynn Gallagher to the position. Gallagher has been the Department of Health’s Deputy Secretary, and has also served as General Counsel for the Aging and Long-Term Services Department. Secretary Gallagher described her appointment as “bittersweet,” as it follows the death of Secretary Retta Ward.

Department overloaded with medical marijuana requests

One of the new Secretary’s immediate problems is managing the influx of medical marijuana card requests. According to the Department, the state has about 24,000 people in the medical cannabis program, up from 14,000 last year. On average, New Mexico is receiving 2,700 applications per month. The hard copy system is not helping matters, and approvals are taking about 50 days despite the eight-person team. The state soon plans to bring in some temporary workers to relieve the load.

Underused school-based services cut

The New Mexico Department of Health has chosen not to renew the contracts for school based health centers at Roosevelt Middle School, School on Wheels, Maxwell Municipal Schools, Mountainair Middle and High School, and Belen High School. The department has deemed that primary care services at these school health centers have been underused. Lists of alternative centers that are available for local students have been provided.

A Medicaid provider crisis looks to become even worse

An article written by a public policy analyst calls for the state to reform its Medicaid program, arguing that the current program places an incredible burden on physicians, even before the reimbursement reductions are implemented. In 2014, a Wall Street Journal article emphasized how New Mexico’s Medicaid expansion was vital to those who were suddenly able to obtain care, but exposed the program’s burden on providers. A family doctor turned away all newly eligible Medicaid enrollees who sought care at her practice because of the low reimbursement rates. She noted that Medicaid reimbursed her half of what commercial insurers paid for a moderately complex visit, and regretfully stated that she could not grow the proportion of Medicaid patients that she saw because of the strain it would put on herself and her family.

As if the situation wasn’t bad enough then, the New Mexico Human Services Department recently proposed reimbursement cuts for providers serving Medicaid patients in order to relieve pressure on state and federal government spending. Although preventive care and obstetrics services would be exempt from the cuts, over 2,000 general physicians would be subject to rate decreases.  Hospitals would see their rates slashed by 3 to 8 percent. These cuts stem from the projected $417 million deficit that the Medicaid program will crease in 2016 and 2017, as well as estimates that 43 percent of state residents would be enrolled in Medicaid by 2020. Already, Medicaid patients are subject to lengthy wait times for visits, from three weeks to almost two months. The rate cuts are expected to worsen the wait times.

 

 

 

$260M grant supports renovation, expansion of community health centers

Community health centers (CHCs) in 45 states, the District of Columbia, and Puerto Rico, will receive $260 million via the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) Community Health Centers Fund to support facility renovation, expansion, or construction. The HHS funding will go toward helping the 290 recipients increase patient capacity and provide additional comprehensive primary and preventive health services to medically underserved populations.

The awards will allow CHCs to renovate or acquire new health clinical space to increase capacity and provide care to more than 800,000 new patients across the country. Almost 1,400 CHCs currently serve nearly 23 million people each year. Previously, HHS awarded nearly $500 million in ACA funding to support CHCs’ provision of primary care services, including medical, oral, behavioral, pharmacy, and vision care (see Health centers funding receive $500 million ACA booster shot, Health Law Daily, September 16, 2015). In addition to providing funding for primary care services, the award supported outreach and enrollment activities to help individuals find health care coverage best meeting their needs prior to the beginning of the marketplace’s open enrollment period.

Funding of community health centers

CHCs are public and private non-profit health care organizations that comply with federal requirements to serve a medically underserved population; provide appropriate and necessary services with fees adjusted according to patients’ ability to pay; demonstrate sound clinical and financial judgment; and be governed by a board, a majority of which includes patients of the CHC. For most CHCs, grant funding constitutes about 18 percent of operating revenue, with the remainder coming from Medicaid, Medicare, private insurance, patient fees, and other resources.