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New Jersey Hospital Sues Horizon Blues for Exclusion From Discount Plan

St. Peter’s University Hospital takes the state’s largest insurer to court

St. Peter's University Hospital in New Brunswick, New Jersey, has filed a lawsuit against the state's largest insurer, Horizon Blue Cross and Blue Shield of New Jersey, claiming the hospital was wrongfully excluded from a discount insurance plan called Omnia Health Alliance. 

According to Modern Healthcare, St. Peter's, a 478-bed teaching hospital, filed the complaint November 6 in Middlesex County Superior Court. The hospital requested that Horizon be prevented from issuing Omnia policies and that Horizon disclose the criteria it used to determine which hospitals were part of the plan, according to the court document. 

At a hearing November 9, a judge denied the hospital's request for an injunction to prevent sale of Omnia Health Alliance policies, which will go into effect January 1, but said St. Peter's was entitled to a hearing to determine if it was wrongfully excluded from Omnia, said Jeffrey Greenbaum, St. Peter's attorney. 

In a statement after the hearing, Horizon Public Affairs Director Thomas Rubino said, “It is unfortunate St. Peter's, one of our long-standing 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.” 

Omnia, a two-tier health plan, will provide 15% premium discounts to patients that use a Tier 1 facility or physician, which includes 34 hospitals and 24,000 doctors in New Jersey. Patients who use Tier 2 hospitals, including St, Peter's, do not receive similar discounts. 

St. Peter's claims Omnia categorized the hospital as Tier 2 without notice and without giving the hospital an opportunity to apply for Tier 1 status. In its contract with Horizon, St. Peter's should have been given advance notice of the new network and its criteria, the hospital argues. 

St. Peter's annually serves 245,000 outpatients and 23,000 inpatients. Greenbaum said the impact from St. Peter's Tier 2 status will be “catastrophic.” Horizon reimbursements account for 25% of the hospital's revenue; it expects up to $36 million in losses as a result of the plan because Horizon patients will now go to Tier 1 hospitals instead. 

The hospital spends nearly $39 million annually on care for the uninsured, community outreach, and its clinic, Greenbaum said. “Substantial losses of revenue will impact the services we provide,” he said. 

Greenbaum also noted Horizon excluded seven of New Jersey's eight Catholic hospitals in its Omnia Alliance. “While we don't have any evidence of religious discrimination, I think Horizon did discriminate against independent hospitals,” Greenbaum said. 

A date for the next court hearing has not yet been determined.

Source: Modern Healthcare, November 11, 2015.

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