The new pay structure for hospitals rewards them if they are able to treat patients efficiently and well. In return, patients will get a break on their premiums.
Horizon Blue Cross Blue Shield of New Jersey, the state's largest health insurer, announced Thursday that it plans to offer new lower-priced insurance policies that offer discounts for care provided at 34 selected hospitals.
Individual and employers who buy new Horizon policies that rely on those hospitals can save money on premiums, deductibles and co-pays, according to Horizon. Prices and coverage details of those policies will not be announced until next month, however.
In return for providing quality care at a lower cost, 22 of those hospitals will receive higher reimbursements from Horizon, the company said.
The OMNIA Health Alliance, which Horizon said is the first of its kind in the state, moves away from a fee-for-service model to one that offers "fee-for-value," a Horizon spokesman said.
Horizon CEO Robert A. Marino said the collaboration with hospitals will require "a new level of trust" between two groups that have often wrestled over hospital bills, with insurers feeling they're being over-billed and doctors and hospitals complaining they're being short-changed.
"There has always been angst between payers and providers," Marino said. "With this collaboration, we are truly partners."
Under most insurance policies, patients are billed based on the services they receive - whether it's a heart bypass, hospital stay, stint at a rehab center, or home health visits. That means any complication - a wound that won't heal, or a rocky convalesce that puts the patient back in the hospital - costs patients and their insurers more money.
Under this new alliance, participating hospitals and physicians will be rewarded for quality care that results in speedy recovery, Horizon said. OMNIA will also emphasize preventive care that heads off health problems before they snowball into crises.
Quality care that avoids problems is not only better for the patient, but is almost always less expensive, Marino noted.
The 22 participating hospitals include some of the titans of the health care landscape - at least in the northern part of the state: Hackensack University Health System, Atlantic Health System, Barnabas Health, and Robert Wood Johnson Health System. The OMNIA rolls also include Summit Medical group, a multi-specialty physician group.
They were chosen for their quality, their willingness to embrace a different pay structure, their location, their infrastructure, and their reputation among Horizon customers, said Kevin P. Conlin, Executive Vice President for Healthcare Management at Horizon.
Customers with OMNIA policies will be able to get care at any of Horizon's in-network hospitals. However, they will receive added savings if they stick with one of the 22 on the list, or any of the hospitals in the insurer's network, which includes all but three of the hospitals statewide.
Left out of the group are many of the hospitals serving the inner cities, Catholic hospitals, and some of the major hospitals in southern Jersey - including Cooper University Medical Center in Camden.
Also not included were any for-profit hospitals, whose policy of charging highest-in-the-nation fees for emergency care has been a bone of contention with the state's insurers. A bid earlier this year by some state legislators to impose an arbitration system on such fees went nowhere in Trenton.
As always, people who require emergency care should go to the nearest emergency room without fear of any financial penalty, Marino said.
Although OMNIA will not be a separate company, it will trigger the creation of about 200 new jobs to service the new portfolio of products. Marino said that customers who choose an OMNIA policy can expect to receive more pre-sale and post-sale education about how the plan works.
Horizon is betting that the new arrangement will allow it to give its customers access to top hospitals while at the same time lowering premiums and deductibles, said Joel Cantor, director of the Center for State Health Policy at Rutgers University, who was briefed on the plan by Horizon.
"They're taking a bold move - and not without risk," he said. Should the arrangement fail to deliver the projected savings, the lower premiums will be unsustainable.
Horizon is the largest provider of health insurance in the state, with market shares ranging from half to two-thirds depending on the category.
Without plan details, it's hard to know what kind of insurance OMNIA customers will be getting for their premiums, said Linda Schwimmer, vice president at the New Jersey Health Care Quality Institute.
"The changes are going to happen, and there's a lot of good stuff in some of these products," she said. "They're much better than the high deductible products of the past, where consumers were afraid to see a doctor at all because of the high co-pays."
The hospitals participating in OMNIA are:
- Chilton Medical Center
- Clara Maass Medical Center
- Community Medical Center, Toms River
- Hackensack UMC Mountainside
- Hackensack University Medical Center
- Hackensack UMC at Pascack Valley
- Hunterdon Medical Center
- Inspira Medical Center Elmer
- Inspira Medical Center Vineland
- Inspira Medical Center Woodbury
- Jersey City Medical Center
- Monmouth Medical Center, Southern Campus
- Monmouth Medical Center
- Morristown Medical Center
- Newark Beth Israel Medical Center
- Newton Medical Center
- Overlook Medical Center
- Robert Wood Johnson University Hospital Rahway
- Robert Wood Johnson University Hospital Somerset
- Robert Wood Johnson University Hospital New Brunswick
- Robert Wood Johnson University Hospital Hamilton
- Saint Barnabas Medical Center
Hackettstown Medical Center, which is in the process of being acquired by Atlantic Health, will ultimately be folded into the OMNIA group, according to Conlin.
Meridian Health, the Shore-based hospital system that is merging with Hackensack, will also be incorporated into the new alliance at some point, he said.
Twelve other hospitals will not be part of the OMNIA partnership, but will be considered Tier One hospitals where care will cost the same as at the OMNIA facilities.
One long-term concern, said Schwimmer, will be the impact the OMNIA arrangement might have on the hospitals that are not included in it - particularly those that see a lot of uninsured or Medicaid patients. If they start to see a large drop in privately insured patients, their fiscal health could be imperiled.
"One of government's charges is to make sure we have a system that takes care of these individuals," she said. "You have to make sure your essential hospitals are there because if they aren't, the state is going to have to step in to support them financially."
OMNIA does not need approval by the state's regulators, said Marino. State officials had been briefed about the collaboration, though. "They're fully aware of what we're doing and have not seen a problem from any regulatory perspective," he said.
Kathleen O'Brien may be reached at kobrien@njadvancemedia.com. Follow her on Twitter @OBrienLedger. Find NJ.com on Facebook.
