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OMNIA not out of the legal woods yet Horizon wins 1 ruling, still faces 2nd suit over plan

One down, one to go.
That is what three Appellate Division judges face on their list of lawsuits pertaining to a tiered network plan from the state’s largest health insurer.

Last Tuesday, judges Michael Haas, Allison Accurso and Carmen Alvarez issued an opinion that, in a case involving 10 hospitals against the state Department of Banking and Insurance, the latter was in the right.

Haas said that the OMNIA plan by Horizon Blue Cross Blue Shield of New Jersey, which was replacing an older tiered network — the Advanced Tiered Network plan — was properly approved by DOBI based on existing regulations.

And any need for newer regulations, which is a point of contention from the hospitals, should be handled by the legislative branch, Haas said.

That avenue is already in motion, with a total of six bills making their way through the State House in Trenton.

In the Advanced Tiered Network plan, four of the 10 (previously 11) providers suing DOBI over its OMNIA approval were in the top tier. That includes Kennedy Health, Our Lady of Lourdes Medical Center, St. Francis Medical Center and Trinitas Regional Medical Center — all of which are currently in the second tier of the OMNIA plan.

The remainder of the hospitals in the suit were in Tier 2 in both the Advanced and OMNIA plans. This includes Capital Health System, CentraState Medical Center, Holy Name Medical Center, JFK Medical Center, Valley Health System and Virtua Health System.

But there is still another matter the judges have yet to decide on: whether or not the five hospitals in the suit against Horizon should have access to all the information in a consultant’s report about how OMNIA was created.

Horizon’s attorney, Michael Kassak, argued that the information in the sought-after McKinsey & Co. report revealed too many “trade secrets” and “secret sauce” to be allowed into the public eye.

The two lawsuits against Horizon are currently in Middlesex and Bergen County courts. Though the suits are slightly different, they both cover a breach of contract, in which Horizon allegedly did not allow a fair chance for hospitals to participate in the top tier of the two-tiered OMNIA plan.

Steven Goldman, representing the five hospitals, issued a statement on the matter:

Breaking it down
Arguments from last week’s OMNIA opinion siding with the state Department of Banking and Insurance against 10 hospitals:
Hospitals allege the OMNIA network did not comply with “statutory and regulatory geographic access and availability standards … for network adequacy.” Appellate Division Judge Michael Haas said Horizon Blue Cross Blue Shield of New Jersey did take steps to fix certain deficiencies, such as applying Tier 1 benefits to Tier 2 obstetrical services in Burlington County.
The hospitals allege that the network did not meet adequacy requirements because Horizon did not have signed agreements with all the Tier 1 providers. Haas said DOBI regulations allow for “contracts or other arrangements acceptable to the department sufficient to meet the medical needs of covered persons.”
The hospitals allege that DOBI should have considered the public interest, since the tiered network endangers the hospitals and interferes with the continuity of care. Haas, again citing the 1997 Health Care Quality Act, replied that DOBI has no legislative mandate. “There is no provision in any of the governing statues that requires the department to make a specific finding that … is in the public interest before it can be approved. That having been said, we recognize that the public interest is an added dimension in every administrative proceeding … and, in a sense, the public is an omnipresent party. However, the public interest is plainly served when an administrative agency follows the governing statues and regulations.”

“In their oral argument to the Appellate Division today, Horizon once again sought to block the public disclosure of critical information regarding its controversial OMNIA plan,” he said. “In two separate lawsuits, Judge Frank Ciuffani and Judge Robert Contillo have ordered the confidential disclosure of the McKinsey report and its Agreements with its Alliance Partners.

“These documents concern how the Alliance Partners and Tier 1 hospitals were selected and evaluated, and what is expected of Alliance Partners. Horizon has refused to turn over that information, instead relying on legal tactics to block any discovery of the report and other documents.”

An opinion on this matter is pending. But the same hospitals involved in the Bergen County case are also involved, along with five more, in the case against DOBI.

In siding with DOBI, Haas cited a 1997 law that allows for provider-insurer relationships under “explicit standards, to furnish a comprehensive set of health care services and financial incentives for covered persons to use the participating providers and procedures provided for in the plan.”

Haas said Horizon’s plan falls within this definition.

The OMNIA tiered plan splits almost all of New Jersey’s hospitals and health systems into two tiers, with many of the urban safety net hospitals and Catholic hospitals left out of the top tier.

The lawsuit against DOBI was one of four related to the OMNIA product and was brought on by 11 hospital systems. Since then, St. Luke’s Warren Hospital, in Phillipsburg, dropped out of the suit.

The hospitals argued that DOBI ignored lack of compliance by the OMNIA product and acted “arbitrarily, capriciously and unreasonably.”

Haas’s opinion says that, ultimately, DOBI can be its own judge on the rules and regulations and should be able to make the decision.

“Established precedents guide our task on appeal. Our scope of review of an administrative agency’s final determination is limited,” Haas wrote in the appeal, citing a previous case involving DOBI.

“Moreover, an agency’s interpretation of its own rule is owed considerable deference because the agency that drafted and promulgated the rule should know the meaning of that rule.”

After the hearing last Wednesday, the day after the DOBI opinion, Horizon said if the judges approved a demand for the McKinsey report, it would set a precedent. Not only does the report contain sensitive information about competing hospitals with those suing, but also sensitive information that Horizon’s competitors would have access to if revealed.

“No other carrier has disclosed the criteria they used to create their tiered networks, only Horizon has,” according to a statement from Horizon. “While some hospitals continue to defend the status quo and are content to be part of the problem, Horizon is committed to being part of the solution.”

E-mail to: anjaleek@njbiz.com
On Twitter: @anjkhem

Anjalee Khemlani

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