Horizon BCBSNJ Looks to Smooth Bumpy OMNIA Rollout

The CEO of Horizon BlueCross Blue Shield of New Jersey defends its value-based care collaborative, which has been criticized by the Medical Society of New Jersey.

Horizon BlueCross Blue Shield of New Jersey's statewide OMNIA Health Alliance value-based care collaborative is getting a rocky reception in the Garden State.

At its launch earlier this month, the alliance of the state's largest insurer with six health systems (comprised of 22 hospitals) and the state's largest physician group was called "an unprecedented collaboration that will significantly transform how healthcare is financed and delivered in New Jersey for the better," by Robert A. Marino, chairman and CEO of Horizon BCBSNJ.

Since then, however, the collaborative has faced criticism and concerns that it might create competitive disadvantages for hospitals and physicians outside of OMNIA, or create access issues for some cities that aren't represented in the alliance.

Marino spoke with HealthLeaders Media about the rollout, and addressed some of the criticism. The following is an edited transcript.

HLM: Are you surprised by the rocky rollout?

Marino: We felt strongly, given who we are in New Jersey and our industry and given what our customers were telling us, that the current system is not sustainable. We needed to do something different, innovative and bold.

When you announce anything that is new, that is innovative and bold, there is going to be some fear of change and further it is complicated by a significant amount of misunderstanding and misinformation out there and we are trying to do our best to correct this.

HLM: The Medical Society of New Jersey has expressed concerns that OMNIA "may not have adequate provider networks or realistic consumer costs. We have been saying for years that we have network adequacy problems in this state, and that they are only being exacerbated as narrow and tiered networks are introduced." Is this a valid concern?

Marino: They might be confusing the definition of a 'narrow network' with a 'tiered network.' We are not introducing a narrow network in the state of New Jersey. We are introducing a tiered network, meaning that our entire broad-access network is the basis of this new product and that is the largest broad-access network in the state.

Our members will continue to have access to the same broad-access networks that they have always had access to. With respect to the tiered network in terms of professional coverage, we have 52% of all primary care physicians in Tier 1. When you add all the specialists it is something like 62% to 64% of all professional providers are in Tier 1. We clearly meet the access standards that are imposed on us by the state of New Jersey and actually exceed them.

HLM: The New Jersey Hospital Association has raised questions about "geographic coverage and access to care; whether it will exacerbate out-of-network issues; and education and awareness – so that consumers fully understand their coverage and the potential out-of-pocket impact." Are these concerns valid?

Marino: With respect to the out-of-pocket impact, perhaps the hospital association isn't aware of the plan design. Members who choose to use a Tier 1 facility will see substantial savings in their out-of-pocket cost in the form of lower deductibles, [and] in some cases no deductibles.

Members still are going to have access to the broad network. There isn't any disincentive to use a Tier 2 provider. The benefits will be essentially the same as they are today. It is basically an incentive-based product design for Tier 1 while still providing broad access to the wider network with essentially the same product design as today.

OMNIA is one of several product offerings we have. We are not withdrawing any products. Our customers will still have access to a broad portfolio of Horizon products. We are just providing an additional choice with the addition of the OMNIA product.

With respect to tiered networks, if my memory serves me correctly, it might be the hospitals in New Jersey that first developed the tiered network concept for their own employee benefits plans.

HLM: Are there any concerns that OMNIA could hinder competition in New Jersey?

Marino: I am not certain that the OMNIA alliance or the products we have in the market are in any way going to limit the competition here. It might actually accelerate some of our competitors also shifting toward value-based benefits designs.

HLM: Observers have criticized the lack of transparency in the process of selecting OMNIA hospitals.

Marino: The process that we used to prioritize and ultimately select our hospital partners was a very deliberate, strategic, almost proprietary process. No hospital was invited into something that resembles an RFP-like process. There were six broad categories that we used in the prioritization process, including: clinical quality, the service offering across the continuum of care, consumer preference data from publicly available sources, value-base care capabilities, scale of the organizations we selected, and their commitment to value.

There is a misconception that we didn't ask certain hospitals to participate. We asked no hospitals to participate. We identified the potential partners we wanted and we approached them. They had no knowledge that they were being prioritized in this process.

HLM: Do you anticipate regulatory hurdles?

Marino: We believe our products in the marketplace to support the new alliance are consistent with regulation both at the federal and state level. I don't anticipate any regulatory roadblock at this time.

HLM: When do you hope for OMNIA to be operational, and how many lives will be covered?

Marino: It's difficult to project the demand because it's the marketplace that tells you whether or not the product is going to be acceptable and meets the demand. In the first year, 2016, our best projection is that about 250,000 members will select the product out of our nearly 3.9 million members.

HLM: How seriously do you take these criticism?

Marino: Obviously we are listening very hard to the critics. We embarked on a significant education program. We are trying to correct a lot of misinformation out there. We are hopeful once people understand what we are trying to do some of the pushback will subside.

We believe we are doing the right thing. We are listening to our customers and we simply believe that in order to contain out-of-control healthcare costs we have to move to a value-based system. All I can tell you is we are committed to doing this. We think we are on the side of goodness on this one.