With 3.7 million members, 82-year-old Horizon Blue Cross Blue Shield of New Jersey is by far the state's largest health insurer. After the passage of the Affordable Care Act in 2010, Horizon took a leadership role in the movement to increase the quality and lower the cost of medical care in the Garden State.
NJBIZ spoke to Robert A. Marino, who became CEO of Horizon on March 1, 2011, amid the seismic changes wrought by the ACA. The law requires most Americans to get health coverage or pay penalties, while creating a new online marketplace, HealthCare.gov, where Horizon and other insurers sell government-subsidized health plans that are helping reduce the number of the state’s uninsured residents.
In 2016, employers with more than 50 workers will have to offer a health plan or pay penalties.
Marino contends the ACA did little to stem the rising cost of health care. He has continued to lead Horizon’s effort to transform the delivery of health care in New Jersey by creating the state’s largest network of “patient-centered” medical practices, where doctors get financial incentives to deliver higher quality care that also makes more efficient use of health care resources.
NJBIZ: How are you leading Horizon into a future where consumers do their own health insurance shopping?
Robert Marino: We started transforming our marketing efforts right after the Affordable Care Act passed in March 2010, because we realized the market was becoming much more retail consumer-oriented. We reconstructed our marketing department, brought in people from consumer goods companies and made significant investments in software analytical tools that we now use to understand consumer buying habits. We opened a Horizon Connect retail center and, this year, for the second open enrollment season under the ACA, we opened retail centers in four New Jersey shopping malls. We have a much better understanding of our consumers and their buying habits. It’s really quite dramatic — the changes we’ve made.
NJBIZ: How many of your members shop for their own health plans now, and where is this headed?
RM: Of our 3.7 million members, I would estimate that more than 40 percent are making buying decisions with respect to their health benefits. It is very likely that in five years, we could have 65 percent to 70 percent of our membership making individual buying decisions. That includes individual members (who shop for their own coverage) and members of group (employer-sponsored) health plans where the group has moved to a private exchange, and now the employee is making an individual choice.
NJBIZ: What are your plans for your network of patient-centered medical practices, which receive financial incentives to focus on the quality, rather than the quantity of care?
RM: We have the largest patient-centered medical network in New Jersey, with 3,700 physicians. About 500,000 of our members are getting their care through patient-centered initiatives and that number will increase to about 675,000 shortly after the new year. Our goal is to have 80 percent of our 3.7 million members receiving patient-centered care by 2020.
NJBIZ: The Legislature is addressing the issue of out-of-network medical bills, where payers like Horizon can face unusually high medical claims when members get care, particularly in emergencies, from out-of-network providers. What should be done?
RM: We feel strongly that the best solution is some kind of fairly determined cap on out-of-network reimbursements. Some states cap out-of-network payments as a percentage of Medicare, whether it’s 125 or 135 percent of Medicare. Another way this can be done is all the payers in New Jersey contribute their claims data to an independent actuarial firm, which, under the auspices of the state Department of Banking and Insurance, could determine a reasonable reimbursement for an out-of-network claim. Today there is no relationship between the charges that we see from out-of-network providers and the cost of the service provided, and in many cases we have seen really excessive charges.
NJBIZ: How is Horizon addressing employer concerns that the rising cost of coverage is pricing them out of the employer-sponsored health plan market?
RM: I think that employers still see value in offering health benefits: Many employers see it as recruitment tool, they see it as a competitive advantage and some feel it’s a moral obligation. We believe that the real solution is for us to lead the way in transforming, at least in New Jersey, how health care is delivered and how it’s paid for. That is why Horizon has made a major commitment over the next three to five years to really move from a volume-based, fee-for-service system to a value-based system.
NJBIZ: Is value-based health care evolving into a business strategy for Horizon?
RM: We’re seeing early results that show our members are getting better quality and we’re seeing a lower total cost of care. In 2013 we compared 200,000 members in our patient-centered initiatives to 200,000 comparable patients not in patient-centered initiatives. Those getting patient-centered care had a 14 percent higher rate of diabetes control, 12 percent higher rate of cholesterol management and an 8 percent higher rate of breast cancer screening. And we saw 4 percent lower use of the ER, 2 percent less hospital admissions and a 4 percent lower total cost of care.
And now we are finally able to commercialize this. Last July we introduced two new products in the small employer market, built on our network of 3,700 patient-centered physicians. And we offered those products at a 15 percent (lower) premium. We are putting products into the marketplace for employers that are more affordable as we continue our efforts to transform care from volume-based to value-based.
NJBIZ: With the Republican Party majority in Congress next year and a presidential election in 2016, is the ACA likely to be repealed?
RM:I don’t think the ACA is going to go away, even with the change of Congress to Republican control, and perhaps even with a Republican president. Perhaps there will be some modifications to aspects of the ACA, but I think structurally and fundamentally the ACA isn’t going away. This country had a societal problem of 44 million people who were uninsured: It’s a societal problem because we all wind up paying for it. Under the ACA we now have 9 million more Americans who have access to health insurance coverage who didn’t before, and I think fundamentally that is a good thing. There are opportunities for improvement in the law, but I believe it’s here to stay.
NJBIZ: How will the Supreme Court decide the lawsuit challenging the federal health insurance subsidies in states like New Jersey that didn’t set up their own exchange but are using the federal exchange, HealthCare.gov?
RM: I don’t think I can predict how the court is going to rule. I would only say that the subsidies are really the underpinning of making the entire ACA work, and clearly if the court were to rule against the subsidies the states are going to have to come up with a solution to keep the millions of people who’ve gotten coverage through the exchange able to keep their coverage.
The subsidies are the underpinning of the ACA and they need to be in place in order for this thing to work. I would hope that New Jersey would come up with a mechanism that keeps the 160,000 New Jerseyans who’ve gotten coverage through the exchange eligible for that coverage and that reasonable minds come to the table to figure out a solution.
NJBIZ: What’s your prediction for 2015 for Horizon?
RM: We will continue to advance our patient-centered initiatives and our payment innovation models in 2015, which will be another year of continuing change for Horizon.
NJBIZ: What is your prediction for the health care industry in 2015?
RM: We will see more consolidation. There has been a tremendous amount of hospital consolidation in New Jersey in the last several years; a lot of it was initiated as a result of the ACA and I think it will continue. We will continue to see hospitals acquiring physician practices. The movement toward consumerism in health care will continue to gain momentum, as consumers and employers continue to demand better value for their health care dollar.
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Robert A. Marino
TITLE: Chief executive officer
AFFILIATION: Horizon Blue Cross Blue Shield of New Jersey (Newark)
ONE MORE THING: Marino has spent four decades with the Blue Cross system, including 20 years with Horizon.