Update St. Peter’s hospital takes on OMNIA plan in court

St. Peter’s University Hospital took the state’s largest insurer, Horizon Blue Cross Blue Shield of New Jersey, to court over the hospital’s alleged wrongful exclusion from the top tier of a new health plan.(Editor’s note: This report was updated at 3:30 p.m. with additional information and comments.)

St. Peter’s University Hospital took the state’s largest insurer, Horizon Blue Cross Blue Shield of New Jersey, to court over the hospital’s alleged wrongful exclusion from the top tier of a new health plan.

St. Peter’s filed a lawsuit in Middlesex County Superior Court asking for access to the criteria Horizon used for determining the OMNIA Health Alliance’s tiers and a stoppage of plan marketing for five days.

Judge Frank Ciuffani said he believed the hearing was in the public interest to determine if the criteria were arbitrary, and whether or not there was a breach of contract between Horizon and St. Peter’s.

He added that St. Peter’s deserves an opportunity to determine if it was wrongfully excluded and actually qualifies for the top tier. However, he would not issue an injunction on the plan.

“We appreciate the court’s decision to deny St. Peter’s University Hospital’s attempt to stop Horizon Blue Cross Blue Shield of New Jersey from offering the new lower-cost OMNIA health plans to consumers,” Horizon said in a statement. “The court’s decision ensures more affordable health insurance options will be available to New Jersey consumers, including the projected 40,000 currently uninsured who will be able to afford OMNIA health plans in 2016.”

The hospital’s attorneys said Horizon’s contract states that it is eligible for any new plans Horizon creates, and that Horizon is in charge of determining criteria.

In the complaint filed last week, St. Peter’s claims Horizon is in breach of its “fiduciary duty to Saint Peter’s to exercise its discretion in a fair and open manner that will rationally advance the public good.”

The OMNIA plan includes six health systems and a physicians group, as well as an additional eight hospital systems in the so-called Tier 1. Some hospitals excluded from the top tier, as well as lawmakers and others, have expressed concerns about the effects of the ranking system and how it was determined.

Horizon attorneys said that while St. Peter’s is asking for an injunction on OMNIA, it also wants to be a part of the plan, so it does not have an issue with the actual plan, but rather is bitter at being left out of the top tier.

“It is unfortunate that St. Peter’s, one of our longstanding network hospitals, would choose litigation instead of conversation on how we can work together to provide those we both serve with access to lower cost health care,” Horizon said in its statement. “Horizon will vigorously defend its ability to offer the people of New Jersey innovative low cost health insurance options.”

St. Peter’s said it met with Horizon last week to discuss being a part of Tier 1, and after being “brushed off,” chose litigation as a last resort.

The hospital said it could lose anywhere between $4.5 million and $36 million in the future, as the OMNIA Alliance is geared toward steering patients — through low or no copays, along with physician referrals — to Tier 1 providers.

St. Peter’s heavily relies on private payers, according to court documents. The payor mix is 53.2 percent commercial insurance, 23 percent Medicaid, 19.4 percent Medicare and 4.4 percent uninsured, including charity care.

Horizon is also largely responsible for the reimbursements received by St. Peter’s, including $79 million in 2014, which was about 20 percent of total revenue and about 25 percent of its net patient service revenue, according to court documents.

By comparison, St. Peter’s received $38 million from its next largest commercial insurer, United/Oxford.

Jeffrey Greenbaum, representing St. Peter’s, said Horizon could not arbitrarily redefine health care in the state in the secretive way it did.

While basic categories used in the tier rankings were revealed by Horizon, the weight of all hospital scores were deemed proprietary, and could be sealed during court proceedings when the case begin.

Horizon also warned that this suit opens up the floodgates for lawsuits by every doctor or hospital in the state who was excluded from the top tier.

A next hearing date has not been determined yet, but Ciuffani said the entire case could be decided before the OMNIA plans are activated Jan. 1.

Horizon is on the line to show that its selection process was fair, and that St. Peter’s wasn’t discriminated against in any way in its exclusion. St. Peter’s is being given its “day in court” to show that it does qualify to be part of Tier 1, and was wrongfully excluded.