By Patrick T. Brown • Catholic News Service • Posted November 11, 2015

TRENTON, N.J. (CNS) — Even before the Affordable Care Act brought a sea change to the health care industry, the business of medicine had been experiencing fundamental transformation.

Hospitals, insurers and patients have struggled to keep afloat despite ever-quickening currents changing how health care is paid for and delivered.

Now, critics say, a new wave of changes announced by New Jersey’s largest insurer could leave nearly all of the state’s Catholic hospitals high and dry.

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In September, Horizon Blue Cross Blue Shield of New Jersey unveiled the OMNIA health alliance, a collaboration with a number of large health systems to change how care is provided and reimbursed.

The goal: more coordinated and efficient provision of health care. But the alliance’s possible impact on Catholic health care providers, almost entirely left out of preferred status in the new plan, as well as the urban poor, who could be disproportionately impacted, have raised questions all the way up to the Statehouse in Trenton.

Catholic hospitals fear that OMNIA’s clients will be steered toward preferred-tier providers. They see a future in which their ability to provide services could be crippled and their reputation for high-quality care significantly damaged.

It’s hard to overstate the “impact this would have on our mission, on our margin, and really the values we uphold,” said Sister Patricia Codey, a Sister of Charity, who is president of the Catholic HealthCare Partnership of New Jersey.

“We believe that there was a lack of transparency on Horizon’s part, and that they came about this plan in secret, and we believe that there’s a moral and ethical injustice,” she told The Monitor, Trenton’s diocesan newspaper.

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The concerns of Catholic hospitals, and how the alliance would treat New Jersey’s most vulnerable, have sparked statewide discussion and a potential investigation by the state’s attorney general.

Over the past decade and a half, the amount spent on health care in the United States has risen from $4,881 per person in 2000 to $9,255 in 2014, according to the National Center for Health Statistics.

The company saw those numbers — driven by both the overutilization of health care and underutilization of preventative measures –- as necessitating a new approach to health insurance, said Dr. Minal Patel, Horizon Blue Cross Blue Shield’s senior vice president and chief strategy officer.

“We had done enough cost-shifting to the consumer: deductibles, co-pays that are already incredibly high. That’s primarily what the 2000s were about,” Patel said. “We looked at this as an incredible opportunity to get more value out of our health care system.”

Horizon insures about 3.7 million consumers, approximately two out of every five individuals across the state. Its new OMNIA alliance is a partnership with some of New Jersey’s largest health care systems, including Robert Wood Johnson Health System, Barnabas Health, the Hackensack University Health Network, and others.

The alliance will offer hospitals lower reimbursements for care provided, but would compensate by theoretically ensuring greater patient volume through the preferred plan. Hospitals would receive financial incentives for keeping patients healthy, and consumers could look forward to lower premiums — about 15 percent lower, according to the company.

In total, 34 hospitals were selected to be in the preferred group, known as Tier 1. Only one — St. Joseph Healthcare System in Paterson — is a Catholic hospital.

It’s hard to know why so many Catholic hospitals were placed in the less-attractive grouping, referred to as Tier 2, said Alexander Hatala, president and CEO of Lourdes Health System. Lourdes’ acute care facility in Burlington County is one of two Catholic hospitals in the diocese, along with St. Francis Medical Center in Trenton.

“It appeared that the criteria were developed in a way to select certain members,” Hatala said. “Neither Lourdes Health System or St. Francis were given the opportunity to participate in Horizon’s new OMNIA network, despite numerous attempts on our part to engage Horizon in that discussion.”

Michael Maron, president and CEO of Holy Name Medical Center in Teaneck, said that among the roster of Tier 2 hospitals, “the only apparent common thread is you’re either a stand-alone hospital, which (many of) the Catholic hospitals are, or you’re Catholic.”

Patel said that three-quarters of the criteria his company used were objective and available via third parties.

Throughout the process, he stressed, “we did not take tax status, religious affiliation, (or) governance structure into any of the inputs that led to our determination.”

Sister Pat said the end result was skewed toward larger systems, giving Catholic hospitals the short end of the stick.

“Many of the hospitals that are not in Tier 1,” said Sister Pat, “have not only provided quality, but they are way more cost-efficient and cost-effective than the Tier 1s. So why aren’t you rewarding the ones that provide quality and low cost, as opposed to rewarding the ones who don’t necessarily have better quality at incredibly higher prices?”

Catholic hospitals have a special emphasis on ensuring that the poor and vulnerable receive access to health care. The U.S. Conference of Catholic Bishops has long held that health care is “a basic human right” and that “universal coverage should be truly universal,” as they wrote in a 2010 letter to Congress.

The Catholic HealthCare Partnership of New Jersey is a statewide coalition established by the leaders of Catholic health care to advance their ministry and mission. Sister Pat said her members have concerns about the impact OMNIA’s tiers could have on their ability to provide services to at-risk populations.

“Most of (the hospitals) who were excluded were rural, urban and Catholic,” Sister Pat said. “And those are the institutions that deliver health care to the poor, the vulnerable and the uninsured.”

“The loss of any commercial insurer would have a substantial impact on the ongoing viability of any urban provider because the (profit) margins are so thin,” said Hatala, who joining Lourdes as chief operating officer in 1986. “It does not appear that there was any consideration of access given for the urban poor.”

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As currently constituted, OMNIA clients who live in Trenton would be left without a Tier 1 hospital in their city. Plan members in Burlington County would be an hour away from the nearest Tier 1 hospital.

“In terms of the exclusion of Catholic hospitals but also urban hospitals in the state, it really puts our mission at risk,” he said. “If you think about the fact that there is no provider in the city of Trenton … it seems like the network they did put together was somewhat flawed in design.”

In Trenton, St. Francis Medical Center has been recognized as being in the top 10 percent of hospitals in the nation for safety, and leaving it out of the Tier 1 designation, Sister Pat said, will give consumers the false impression that this top-tier hospital, along with many others, is in fact sub-par.

“It’s a real branding issue,” she said. “It’s the Tier 1s and the Tier 2s, it’s like the winners and the losers, or the ‘haves’ and the ‘have-nots.'”

Tiered networks are “not a new concept,” Patel said. He cited hospitals that have had tiered preferences for their own employees “for decades” as an example.

Other insurers, including Aetna, AmeriHealth and Health Republic of New Jersey, have deployed tiered networks, but Horizon BCBSNJ’s size as the state’s largest insurer brings the concept to a much wider scale.

The Catholic hospitals’ complaints about transparency and access were heard by state Sens. Nia Gill and Joseph Vitale, who, respectively chair the commerce and health committees. They sent a letter to the state’s acting Attorney General, John J. Hoffman, urging his office to launch a formal inquiry into the selection of Tier 1 hospitals and its impact on consumers.

Another letter was sent to the Federal Trade Commission, requesting federal oversight to ensure “fairness, transparency, and consistency.”

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Brown is associate editor of The Monitor, newspaper of the Diocese of Trenton.