Horizon Blue Cross Blue Shield of New Jersey's plan that will be phased-in beginning in January appeared to create a distinct group of winners and losers in New Jersey's cutthroat health care marketplace, industry insiders and observers said.
TRENTON -- Hours after the state's largest insurance company announced Thursday it was forging a partnership with 34 hospitals to "significantly transform how health care is financed and delivered in New Jersey," officials from St. Francis Medical Center in Trenton, a small but renowned community hospital excluded from this new venture, said they were contemplating a grim future.
"This would have a significant financial impact, and could affect the future viability of Saint Francis Medical Center," said spokeswoman Kim Barnes.
Horizon Blue Cross Blue Shield of New Jersey's plan that will be phased-in beginning in January appeared to create a distinct group of winners and losers in New Jersey's cutthroat health care marketplace, industry insiders and observers said.
RELATED: Horizon Blue Cross partners with 22 hospitals to lower rates
Consumers accustomed to rising premiums every year would win, Horizon executives said, by seeing their out-of-pocket expenses decline if they agreed to use the 34 "tier one" hospitals and affiliated doctors that have agreed to accept lower reimbursement rates.
These 34 hospitals would benefit by seeing greater patient volume. And the 22 hospitals who were accepted into the "OMNIA Alliance" would earn higher reimbursements if they show they are providing quality care by keeping people healthier at a lower cost, Horizon executives said.
"Through the OMNIA Health Alliance, we are all making a long-term commitment with a new level of trust, cooperation, and energy that will benefit health care consumers in New Jersey," Horizon Chairman and CEO Robert A. Marino said.
The biggest players in the state's hospital landscape are included in the alliance, such as Atlantic Health, with its flagship hospital Morristown Medical Center, Robert Wood Johnson University Health, based in New Brunswick, Barnabas Health, based in Livingston, and Hackensack University Medical Center.
Yet many of the remaining 38 hospitals in New Jersey who are left out expressed confusion over why they weren't selected, and concern for their future. Patients would still be allowed to use these "tier two" hospitals, but they would pay more. Marino and other executives who announced the plan said they would share more details about cost in the next month.
The 2016 rates listed on the State Health Benefits Program website indicate a big price difference between tier one and two hospitals.
State employees would pay no deductible if they used a tier one hospital, but would pay a $1,500 deductible for a tier-two facility. Patients would see they out-of-pocket expenses capped at $2,500 at tier-one facilities compared to $4,500 at tier-two hospitals. Those seeing a primary care doctor or a specialty physician would pay $5 and $15 if they are affiliated with tier-one hospitals, compared to $20 and $30 co-pays for doctors at tier-two facilities, according to the website.
Enrollment in the new OMNIA Alliance and tiering plans is optional for state employees when the open-enrollment period begins in October, Horizon spokesman Thomas Rubino said. But state employees in specific HMO plans who decline to choose a plan will be "auto-enrolled into the OMNIA Alliance plan," he said.
Sen. Joseph Vitale (D-Middlesex), chairman of the state Senate Health, Human Services and Senior Citizens Committee, said he is concerned about the power Horizon is wielding. He said would hold a legislative hearing to dissect what the changes will mean for consumers and the stability of the hospital industry.
"I don't know if the state's largest insurer gets to decide which hospitals succeed and which ones don't," Vitale said.
Vitale said he sees a lot of gaps in hospital coverage. Burlington County has no Omnia or tier-one hospitals. Neither does Trenton. The only Catholic hospital is Saint Joseph's Medical Center in Paterson, and many inner-city, safety net hospitals are conspicuously absent, he said.
Vitale said he was particularly concerned about the exclusion of Trinity Health, with St. Francis in Trenton, Our Lady of Lourdes Medical Center in Camden, and Lourdes Medical Center of Burlington County. The Trenton and Camden facilities are renowned for their cardiac care.
Horizon has recognized St. Francis' high marks on the Leapfrog Group's patient safety scorecard, said Barnes, Trinity Health's spokeswoman. Trinity asked to join the OMNIA and tier-one group, but was turned down without explanation, she said.
"As one of the top hospitals for safety, we're sort of scratching our heads trying to understand what criteria they used," Barnes said.
Horizon "engaged in a thoughtful and deliberate selection process in developing the OMNIA Health Alliance," Rubino said, explaining these hospitals "share a vision and commitment to reward high quality health care, the ability to impact the health status of large populations, strong brand reputations among consumers and employers, and the resources and capabilities to use new technology to deliver more effective and efficient health care to our members."
Rubino declined to be more specific.
Jersey City Medical Center, Monmouth Medical Center in Long Branch and Newark Beth Israel -- all owned by Barnabas -- are included in OMNIA, said Suzanne Ianni, president of the Hospital Alliance of New Jersey, the trade group for safety net hospitals who treat the most low-income and uninsured people.
But St Francis' exclusion "is quite concerning for the residents of Trenton, state employees and the hospitals that serve them. Not only is this an access issue for Trenton, it could negatively affect the bottom lines of the hospitals that currently serve that population," Ianni said.
Officials from some tier-two hospitals that stood to lose market share and patient volume touted their value but declined to speculate what Horizon's announcement might mean for their bottom line. Saint Peter's University Hospital in New Brunswick was among them.
"Saint Peter's is a stand-alone Catholic institution that operates New Jersey's largest neonatal intensive care unit, delivers more babies than anyone else in central New Jersey, is home to the region's first accredited breast center, and operates New Jersey's only hospital to be ranked by The Joint Commission in all five key quality indicators, including heart failure, acute myocardial infarction, surgical care, pneumonia, and childhood asthma," said Philip Hartman, Saint Peter's spokesman. "Thousands of New Jersey's healthcare consumers prefer Saint Peter's as their provider of first choice, believing that bigger isn't always better, and that clinical expertise and personal attention are of prime importance."
Some consumer advocates said they could not form an opinion yet until more details were available, but expressed guarded optimism over Horizon's announcement.
"At first glance, it could be a positive thing but I will reserve judgment until I can see some of the ramifications," said India R. Hayes Larrier, a health care organizer for Citizen Action New Jersey. "Giving a tiered benefit which allows consumers to be able to judge their own costs, is good. You also have to think about it down the line. They may be paying less, but do they have access to less care or the care (they) need?"
The hospitals participating in OMNIA are:
- Chilton Medical Center
- Clara Maass Medical Center
- Community Medical Center, Toms River
- Hackensack UMC Mountainside
- Hackensack University Medical Center
- Hackensack UMC at Pascack Valley
- Hunterdon Medical Center
- Inspira Medical Center Elmer
- Inspira Medical Center Vineland
- Inspira Medical Center Woodbury
- Jersey City Medical Center
- Monmouth Medical Center, Southern Campus
- Monmouth Medical Center
- Morristown Medical Center
- Newark Beth Israel Medical Center
- Newton Medical Center
- Overlook Medical Center
- Robert Wood Johnson University Hospital Rahway
- Robert Wood Johnson University Hospital Somerset
- Robert Wood Johnson University Hospital New Brunswick
- Robert Wood Johnson University Hospital HamiltonSaint Barnabas Medical Center
Hackettstown Medical Center, which is in the process of being acquired by Atlantic Health, and Meridian Health, the Shore-based hospital system that is merging with Hackensack, will ultimately be folded into the OMNIA group, Horizon officials said.
Other hospitals that will not be part of the OMNIA partnership, but will be considered Tier One offering reduced costs are: AtlantiCare; Cape Regional Medical Center, Cooper University Health System; Englewood Hospital; Shore Medical Canter; St. Joseph's Medical Center; and Princeton HealthCare System.
Staff writer Kathy O'Brien contributed to this report.
Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook.
