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Confidential Documents Suggest Horizon Misled Public on How it Picked Hospitals for OMNIA Program

Posted in Hospitals and Institutions, Litigation, Private Insurers, State Matters

A June 27 article in The Star-Ledger and on NJ.com, “Confidential documents suggest Horizon misled public on how it picked hospitals for OMNIA program,” discussed confidential reports and related documents that have been obtained in connection with a lawsuit brought by three New Jersey-based hospitals against Horizon Blue Cross Blue Shield of New Jersey. Day Pitney’s Mike Furey was quoted in the article.The hospitals alleged that Horizon breached its obligations by limiting its selection of Tier 1 hospitals to the largest hospital systems. In June 2018, the Supreme Court of New Jersey affirmed an order granted by the trial court in response to a motion filed by Advance Local Media LLC, which intervened in the lawsuit, to obtain these confidential materials. According to the article, the confidential materials suggest that Horizon invited two of the largest and most expensive hospital systems to join the exclusive OMNIA network—even before Horizon hired a consultant, McKinsey & Co., to evaluate hospital quality and cost.

“They had already decided they wanted Barnabas and Hackensack to be the partner hospitals. They told the Legislature and the public they selected the best hospitals in the state who provided the lowest cost care, and they said they did it on the basis of what McKinsey told them,” said Mike, who represents the three plaintiff hospitals, Centrastate Medical Center, Holy Name Medical Center and Valley Hospital. “But we uncovered they were already having these discussions in 2013 and early 2014 before they began the selection process.”

The article also reports that Horizon and McKinsey developed six criteria, each weighted differently, to select Horizon’s preferred hospital partners. Leadership and quality each account for 25 percent of the score, which Horizon officials have argued demonstrates its commitment to choosing the best partners. Quality measures earned more weight in later versions of McKinsey’s report.

Mike contended that other categories benefit larger hospitals and hospital chains. Services “across the care continuum” reward hospital chains, because what one hospital may lack in specialty or outpatient care can be complemented by another in the same system, he said. “Consumer attractiveness” favors the big-name institutions that can afford to wage aggressive marketing campaigns. In addition, the article states, based on the confidential materials, that cost was ultimately not considered in selecting Tier 1 hospitals. Horizon officials, according to court records, said they did not judge hospitals based on what they charge now because OMNIA intends to create a “value-based” payment model, which rewards hospitals for keeping people well. However, Mike said Horizon is still paying hospitals the old-fashioned way, so cost should matter.

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