Fierce exclusive: Horizon CEO defends tiered network

There seems to be no shortage of bad blood between payers and providers recently.

What immediately comes to mind are the recent congressional hearings about healthcare consolidation, during which the American Medical Association and the American Hospital Association passionately criticized the two major pending insurer mergers. More than once, AHA representatives even accused insurers of "riding the wave" of provider innovation.

But the payer-provider friction is happening on a more local scale, too. Case in point: Horizon Blue Cross Blue Shield of New Jersey (BCBSNJ) drew a firestorm of criticism from providers in the state when it announced its new Omnia Health Alliance, a tiered physician network intended to cut healthcare costs and further the transition to value-based care.

The network's critics say the insurer's choice of providers to be included in its new network was neither fair nor transparent, but Horizon BCBSNJ CEO Bob Marino (pictured right) tells FierceHealthPayer in an exclusive interview that they've got it all wrong.  

Horizon's motivation for creating Omnia was born out of recent market research, Marino explains, which not only highlighted promising preliminary results from its alternative payment models but also convinced the company that its customers were being "crushed" by high healthcare costs. New Jersey is the fourth most expensive state for health insurance premiums, he says, and the second most expensive state for overall healthcare costs.

"It became very evident to us that we needed to do something different in order to satisfy what customers were telling us," Marino adds.

By offering lower deductibles, premiums and copays, Omnia's tiered-network health plans incentivize members to use what it calls Tier 1 providers, Marino says. Tier 1 includes six "value-based health systems," one large physician group and 14 additional Tier 1 hospitals chosen in order to expand members' geographic access to care. If consumers or businesses chose to use Tier 2 providers, they will pay out-of-pocket costs similar to what they currently pay. 

Additionally, Horizon intends to collaborate closely with the six value-based health systems and physician group that it hand-picked, a relationship Marino says will differ from the "typical payer-provider one-year relationship where you sit down and you talk about unit cost adjustments." With these providers' help, the insurer will build infrastructure to integrate claims and clinical data to identify real-time gaps in care and pursue population health management goals.

But New Jersey health systems not included in Omnia's Tier 1 have expressed confusion and frustration--particularly Catholic hospitals, which have suggested they were largely left out because of their religious affiliation.

In fact, a Catholic HealthCare Partnership official recently told NJ.com that Horizon BCBSNJ "schemed in secret with select hospital systems while refusing to detail the criteria they used" to choose Tier 1 hospitals. The state's Catholic hospitals also say that designating most of them as Tier 2 restricts poorer communities' access to higher quality, low-cost care. 

And at a New Jersey Senate hearing Monday, state Sen. Richard Codey, a Democrat, echoed these concerns, the Asbury Park Press reports. "It was clear to me the other hospitals that weren't in (the network) were stigmatized by your announcement, clearly," he said to Horizon executives. "How can you and your company appease their fears this will not hurt them moving forward?"

But Marino disputes the providers' claims, telling FierceHealthPayer that "religious affiliation, tax status or other governance arrangements were not considered via the evaluation criteria." Furthermore, he says, "I do not believe that in year one or initially the Omnia product is going to cause any irreparable harm financially to any of the Tier 2 hospitals."

As for how it selected its seven partner providers, "clinical quality was a big part of that," Marino says, adding that 75 percent of the criteria Horizon BCBSNJ used were objective metrics. Among some of the factors the insurer considered were a provider's service offerings, consumer preference data, scale of the system, the number of Horizon members a system serves, and alignment between senior leadership and clinical staff about the organization's commitment to value-based care.

If Horizon proceeds as planned with Omnia, it may be difficult to tell even a year from now whether the tiered network will leave Tier 2 providers out in the cold. That's because the insurer projects that only about 250,000 of its 3.8 million members will purchase Omnia products in 2016. But in the long haul, Marino, says, Horizon hopes that it can help the healthcare system change how care is delivered and financed, ultimately bending the medical cost trend.

And despite the provider pushback, Marino adds that he's heard employers commend Horizon for dealing with the pressing issue of high healthcare costs in the state.

"Because it's new and because it's different, we did anticipate some pushback," he says. "But we do believe that this is the right thing to do and the kind of relief that our customers have been longing for."

To learn more:
- read the NJ.com article
- here's the Asbury Park Press report

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