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Horizon's plan for insurance network stirs concerns

Horizon Blue Cross Blue Shield of New Jersey stirred things up this month when it announced the formation of Omnia Health Alliance with just six of the state's 20 health-care systems.

The Horizon blimp over Atlantic City.
The Horizon blimp over Atlantic City.Read moreMICHAEL PLUNKETT / Inquirer staff

Horizon Blue Cross Blue Shield of New Jersey stirred things up this month when it announced the formation of Omnia Health Alliance with just six of the state's 20 health-care systems.

It also included a large physicians group, but the only South Jersey system in Omnia is the relatively small Inspira.

That left health executives scratching their heads over how Horizon, New Jersey's largest health insurer, made its picks.

With the Omnia network, Horizon plans to sell health insurance plans with lower premiums and lower out-of-pocket costs next year if consumers use the Omnia network or an additional eight so-called Tier 1 hospitals and health systems.

"We still have no information at all about the criteria that Horizon used for this," Kimberly D. Barnes, Lourdes Health System's vice president for planning and development, said Wednesday.

Executives at Virtua and Kennedy Health echoed Barnes' remark. Like Lourdes, Virtua and Kennedy are in Tier 2, with higher out-of-pocket costs for consumers in Omnia plans.

The goal of Omnia is to align Horizon's payments to measures of quality, total cost of care, and patient satisfaction, said Minalkumar Patel, Horizon's chief strategy officer.

In deciding which systems would be invited to join Omnia, "cost was not an input," Patel said. "Quality was an input. Did it tip the scale across the board? Probably not. The real linchpin here is the ability for these organizations to move into the future to a value-based reimbursement environment."

Horizon evaluated systems on whether they had the breadth of programs to manage the health of populations and the financial wherewithal to invest in needed infrastructure, Patel said. Other factors, Patel explained, were the institution's reputation and its vision or ability to work with Horizon long term.

Horizon added eight additional Tier 1 systems that are not part of Omnia because of "regulatory requirements from [the New Jersey Department of Banking and Insurance] to make sure from an access point of view we can cover the state," Patel said.

That group includes Cooper University Health Care in Camden, which owns 20 percent of AmeriHealth New Jersey and competes with Horizon with its Community Advantage plan in seven South Jersey counties.

Patel said Horizon expected to sign up 200,000 to 300,000 people under Omnia plans in the first year, less than 10 percent of its 3.8 million current members. Given that low level of penetration, "the notion that we are going to create financial hardship for Tier 2 hospitals is just not true," Patel said.

Patel said that Omnia's lower premiums mean that an Omnia customer could go to a Tier 2 provider and pay about the same as today, despite the higher out-of- pocket costs.

That argument is meant to counter Virtua CEO Richard P. Miller's view that "for Virtua to be out of the Tier 1 network in Southern New Jersey leaves a huge gaping hole in their network in Southern New Jersey."

Industry experts say it won't be easy for Horizon to make this work. "The challenge is getting all of these different hospital systems and physician groups to follow through on that agreement to collaborate," said Joe McGinty, vice president of the employee benefits division at Graham Co., a Philadelphia insurance broker. "I'm sure some of that will be a carrot and a stick tied to their reimbursements."

hbrubaker@phillynews.com

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