A judge in New Jersey is expected to hear a complaint by Saint Peter's University Hospital that it was illegally excluded from a new discounted health plan offered by the state's largest health insurer because it and other independent, Catholic hospitals serve low income residents, according to the health system.
Superior Court Judge Frank Ciuffani on Monday ordered Horizon Blue Cross Blue Shield of New Jersey to hand over documents detailing the criteria and standards it used to choose health systems for its Tier 1 network of OMNIA Health Alliance.
Horizon had argued that its decisions on Tier 1 status were not subject to court review.
Ciuffani refused Saint Peter's request to halt OMNIA from moving forward with the new network in January 2016, but said he would set a date this week for a hearing to be held in December, before the plan goes into effect in January.
The OMNIA Health Alliance divides New Jersey's hospitals into Tier 1 and Tier 2 groups. Under the plan, consumers have access to all of Horizon Blue Cross Blue Shield of New Jersey's current hospitals and physicians, but those who choose Tier 1 hospitals and doctors pay lower out-of-pocket costs.
St. Peter's was in Tier 2, though it said it met quality ranking standards to be in Tier 1. All Catholic hospitals except Saint Joseph's in Paterson, New Jersey were excluded from Tier 1 status, according to Saint Peter's.
"As set forth in our papers, Saint Peter's believes it was wrongfully excluded from the preferred Tier 1 status through a secret process, without a fair opportunity to be considered, in a manner that was contrary to Saint Peter's rights and the interests of all citizens of New Jersey who want cost-efficient access to top quality health care, and to those who want faith-based care," said Attorney Jeffrey J. Greenbaum, representing Saint Peter's.
The hospital, which provides an estimated $39 million in charity care to uninsured and low-income residents, said it could suffer catastrophic financial losses if it were not allowed to participate in the network, Greenbaum told the court, according to NJ.com. The hospital estimated these losses would range from $4.3 million to $39 million, the amount it generates from Horizon managed care policy holders, the report said.
In October, lawmakers in New Jersey got involved in the controversy, accusing ONMIA Health Alliance of cherry-picking top tier hospitals and leaving out providers that largely serve low-income and minority populations.
The alliance is a collaboration of Horizon Blue Cross Blue Shield of New Jersey, six New Jersey hospital systems and a major physician group.
Horizon officials said in a statement that hospitals and doctors were selected based on their commitment to value-based care, strong clinical quality, consumer preference and multiple service offerings.
Horizon Chairman and CEO Robert Marino said at the time that OMNIA Health Alliance was formed as a response to the high cost of healthcare in New Jersey. Residents pay the second highest healthcare costs in the country and costs are rising 25 percent faster in New Jersey than the national average, he said.
The new OMNIA plans will offer monthly premiums that are 15 percent lower than Horizon's standard plans, he said.
Healthcare providers will take discounts in their reimbursements, according to Horizon, but are expected to make that up with added volume. An estimated 250,000 consumers are expected to opt for the new plan either through their employers, on their own, or through the federal insurance exchange.
Twitter: @SusanJMorse