(This story was updated on Nov. 12, 2015)
St. Peter's University Hospital in New Brunswick, N.J., 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.
St. Peter's, a 478-bed teaching hospital, filed the complaint Nov. 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 Monday, a judge denied the hospital's request for an injunction to prevent sale of Omnia Health Alliance policies, which will go into effect Jan. 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 Monday, 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 healthcare.”
Omnia, a two-tier health plan, will provide 15% premium discounts to consumers. Additionally, members with OMNIA plans seeking care at a Tier 1 facility or physician, which includes 34 hospitals and 24,000 doctors in New Jersey, can save more on out-of-pocket costs. Members seeking care at Tier 2 hospitals, including St, Peter's, do not.
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 currently account for 25% of the hospital's revenue and 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 Tier 1 under the Omnia health plans.
The OMNIA Health Alliance, which is separate from the OMNIA health plans, is a partnership between Horizon and six hospital systems and a multispecialty physicians' group that are financially rewarded on measures of quality and performance.
“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. Omnia plans begin Jan. 1.