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Hospitals' suit over OMNIA health plan can continue, Appellate Division says

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Three hospitals suing the state's largest health insurer over the formation of its OMNIA Health Alliance and related tiered health plan can continue their case, according to a court order from the Appellate Division last Friday.

Horizon Blue Cross Blue Shield of New Jersey had filed to essentially dismiss the case, as well as pause depositions and the release of certain documents until the state’s Supreme Court is able to review two orders from Superior Court Judge Robert Contillo.

Both motions were denied by the Appellate Division, according to the hospitals’ attorney, Michael Furey.

Furey represents CentraState Healthcare System, Holy Name Medical Center and Valley Health System, the three remaining hospitals and health systems in the lawsuit, which originally had seven.

Four dropped out of the suit, reportedly in exchange for value-based partnership agreements with Horizon, last year.

The decision by the appellate court is “very positive news,” Furey said.

Horizon declined to comment.

The OMNIA alliance includes seven large hospitals and health systems in the state, as well as the state’s largest physician group, Summit Medical Group.

Depositions are underway in the case and include executives like Hackensack Meridian Health Chief Financial Officer Robert Glenning, RWJBarnabas Health Chief Operating Officer Jay Picerno and Horizon COO Kevin Conlin.

Furey believes the hospitals have built a strong case to show that, despite public statements from Horizon at the rollout of the health plan in September 2015, there was no objective method used to create the alliance and select which providers would be placed in its two tiers.

Tier 1 of the OMNIA health plan ensures lower or no copays for consumers, and health systems have said that, in order to participate, they had to agree to lower rates. Tier 2 providers are considered in-network but their patients don’t benefit from lower copays.

The plan became the center of political controversy when many Tier 2 providers became concerned with its effect on their economic viability, especially in light of Horizon’s claim the alliance and health plan were based on quality.

Furey said Thursday there is evidence that Horizon and the officials at the large health systems determined members prior to any impartial evaluation — including a McKinsey & Co. report that was cited as providing the deciding metrics by which to include hospitals and health systems in Tier 1.

“What we believe the documents show is the decisions to partner with the hospitals was based on the size and not the quality of care provided,” Furey said. “The documents tell a much different story than the public statements of Horizon.”

If the courts continue to greenlight the case for the hospitals, a trial could begin in early September.

“(Friday’s) ruling is an important step in moving this case forward and unraveling the secrecy surrounding Horizon's ill-conceived OMNIA plan,” Furey said. “We remain confident that ultimately the public will learn the truth about OMNIA and that the court will rule in favor of the hospitals.”

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