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Update: Barnabas, Hackensack Meridian execs to be deposed in OMNIA suit, judge rules

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(Editor's note: This report was updated Wednesday with comments from Hackensack Meridian Health.)

Two of the state's largest health systems are now involved in a case brought on by some of their peers against the state's largest insurer, according to a court order Monday.

The case by three hospitals — Holy Name Medical Center, the Valley Hospital and CentraState Medical Center — against Horizon Blue Cross Blue Shield of New Jersey has recently seen a reduction in plaintiffs and a weakening of the case after a recent court decision by Superior Court Judge Robert Contillo.

But the remaining claims, including breach of contract and good faith covenant, could be determined by depositions of C-suite executives from the former Barnabas Health (now RWJBarnabas) and former Hackensack University Health Network (now Hackensack Meridian Health).

Michael Furey, attorney for the three plaintiff hospitals, said the judge’s decision to allow an amendment of the subpoenas — which originally named CEOs Barry Ostrowsky of Barnabas and Robert Garrett of Hackensack — was a good thing for the hospitals.

Furey said the hospitals intend to show that, prior to the McKinsey report, which has been cited as the source for criteria to create the OMNIA Alliance, both Barnabas and Hackensack officials already were in discussions with Horizon about the new program.

Horizon announced the Alliance and the OMNIA tiered network plan in September 2015, and has since been developing the Alliance, while the insurance plan has been on the market for a year. The plan, which began the controversy between the state’s hospitals, divided all hospitals currently in-network with Horizon into two categories. The first category, named Tier 1, included hospitals which agreed to lower rates in exchange for a potential increase in patient volume.

Patients who use Tier 1 hospitals were incentivized with low or no copays in addition to advertised lower premiums. Tier 2 hospitals remained in-network but were not given any incentive. The market shift became a point of controversy, as many in Tier 2 were mostly independent or smaller health systems and urban safety nets in the state, compared with the primarily larger suburban health systems in Tier 1.

"Judge Contillo's ruling today is a clear and decisive victory for New Jersey's independent hospitals, patients and health care transparency,” Furey said in a statement. "We also expect to obtain further evidence that the scoring protocol was biased in favor of the state’s largest hospital systems. This ruling is yet another important step in unraveling the secrecy surrounding Horizon's OMNIA selection process and comes on the heels of last month's decision by Judge Contillo which laid the basis for the hospitals’ three claims to proceed, raising important questions surrounding the formation of OMNIA and the selection of Tier 1 hospitals.

“We remain confident that ultimately the public will learn the truth about OMNIA, and that the court will rule in favor of the hospitals."

Jay Picerno, RWJBarnabas’ chief financial officer, and Philip Turner, director of managed care at Hackensack, or Robert Glenning, Hackensack’s CFO, will be deposed.

“Hackensack Meridian Health is committed to providing our communities with access to patient-centered, affordable, high-quality care. We remain committed to our mission of maintaining health, and not just treating illness. We look forward to continuing partnerships with payors and other innovative providers that share our vision of serving our communities,” said Robert Garrett, co-CEO of Hackensack Meridian Health.

A spokesperson for RWJBarnabas said in a phone interview Monday evening that the system had not yet had an opportunity to review the court's opinion.

Officials for Horizon were not available for comment Monday evening.

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Write to the Editorial Department at editorial@njbiz.com

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