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CONTENTS
4
Gov. Christie Vetoes New Jersey Hospital Tax Exemption Law
4
Does OMNIA Pose Risk to Hospitals?
7
Horizon’s Value Based Incentive Program Pays $3M to Specialists
9
Hospitals Take Next Step in Fight With State Over OMNIA Health Plan
11
Two Bills That Would Expand N.J. Medical Marijuana Law Debated
12
Aetna, Meridian to Debut Co-Branded, Tiered Accountable Care Health Plan
13
Seton Hall, HackensackUHN Name 1st Med School Dean
January 2016
3
Hospital Tax
Gov. Christie vetoes New Jersey hospital tax exemption law By Lisa Schencker New Jersey hospitals fear that Gov. Chris Christie's veto of a bill mandating that not-for-profit hospitals contribute to local municipalities instead of paying property taxes could lead to years of expensive legal action. They hope to create new legislation that will have a better chance of passing in coming months, and in turn avoid more lawsuits involving municipalities looking to pursue property taxes from local hospitals. Betsy Ryan, CEO of the New Jersey Hospital Association, said if everyone can't come together on new legislation, “We'll see … years and years of costly litigation.” The veto represented yet another setback for not-for-profit hospitals, which are coming under increased scrutiny nationwide for their property tax exemptions. The bill was drafted after a state tax court in June pulled Morristown (N.J.) Medical Center's property tax exemption, saying it operated in many ways like a for-profit business. The hospital ended up settling with the city for $26 million, but the judge's ruling worried other not-for-profit hospitals in the state. The bill Christie vetoed would have allowed hospitals to keep their tax exemptions as long as they paid their municipalities $2.50 a day for each hospital bed and $250 a day for satellite emergency-care facilities. Christie spokeswoman Joelle Farrell said the governor's office is not commenting on specific bills, but in a statement on the lameduck session in which the bill was passed, she said the Legislature's votes were “hasty” and that lawmakers had hoped for them to be “rubber-stamped.” Some have speculated that Christie didn't sign the bill because it could be construed by some—amid his bid for the presidency— as a tax increase. But Michael Darcy, executive director of the New Jersey State League of Municipalities, which opposed the bill, agreed that the legislation was rushed. He said stakeholders need to now work on a “rational approach” to dealing with the issue. He said any fees paid by hospitals to municipalities should be “substantiated.”
Does OMNIA pose risk to hospitals? Prior battle may offer clues It was a very public battle between two New Jersey health care companies, the salvos coming on billboards and in dire letters to worried patients. That protracted tug-of-war between a small rural hospital and Horizon Blue Cross and Blue Shield of New Jersey in 2008 may provide some insight into the road ahead for hospitals now fighting Horizon in court. Last fall, Horizon debuted a new line of health insurance that relies on a partnership with about half the state's hospitals – including many of the state's premier chains – for inclusion in its new OMNIA policies. Patients who pick OMNIA coverage pay smaller monthly premiums and also pay less if treated at one of the 36 hospitals that have been dubbed "Tier 1" hospitals. If they go to one of the other three dozen hospitals, which Horizon calls "Tier 2," for anything but an emergency, their bills are covered at the in-network rate – but minus the OMNIA discount. The new plans went into effect Jan. 1 with state approval. (Horizon's regular policies remain unaffected by the tiered arrangement.) The Tier 2 hospitals now fear this price difference will cause patients to flee to their competitors - imperiling their very livelihoods. They've mustered the support of legislators and former governors in their quest to roll back OMNIA, and have filed a battery of lawsuits to fight it as well. But are their concerns valid? A look back at the 2008 tug-of-war between Horizon and Newton Memorial Hospital in Sussex County may offer some insight. Although the situations aren't entirely comparable, Newton's former president said he feels today's Tier 2 hospitals have reason to be concerned. "In the long term, it's very jeopardizing" to run a hospital without qualifying for the best coverage rates from Horizon, said Thomas Senker, who was president of the hospital until his recent retirement. "It's going to result in a loss of revenue and a loss of business." Newton, a 148-bed hospital built in the county seat during the Depression, was struggling financially in 2008 when its annual
4 New Jersey Physician
contract negotiations with Horizon reached an impasse. Instead of accepting reimbursements they felt were unjustifiably low, Senker said the hospital's management and board decided to leave Horizon's network. Senker said he and the board knew they were taking on a big risk: With 40 percent of county residents covered by Horizon, the financially fragile hospital couldn't survive a sizable loss of patients. "We knew it was a tough decision, and it was one we agonized over," said Senker. "But we felt that to roll over could have very negative, long-term effects. We were just looking for equity and fairness." Horizon argued Newton was holding out for higher payments to make up for the money it was losing because of a drop in payments for "charity" care. "It is simply a tax on our members because they have insurance," said a Horizon executive at the time. "It is wrong." Horizon sent letters to its policyholders warning they'd pay more if they got elective care at Newton. Newton countered with a billboard assuring Horizon customers they'd still be covered if they went to the hospital in an emergency. "Oftentimes it was the patient who was caught in the middle, with co-payments and such. It was a tragedy in that respect," Senker said. But he claimed most patients stuck with the hospital. Newton is the only hospital in Sussex County - but hospitals across the county border in Hackettstown, Port Jervis, Denville, and Pequannock vie for its customers. Comparing the Newton saga with the OMNIA situation is apples and oranges, said Tom Vincz, a Horizon spokesman. OMNIA customers do face a higher deductible if treated at a Tier 2 - but that amount is small compared to paying the hefty out-ofnetwork prices applied during the Newton dispute, he said. Furthermore, Vincz said, other insurers have offered tiered network policies in the last five years. "During that time, no hospital has shared any evidence that tiered products caused them hardship. The baseless speculation and unsubstantiated claims now of OMNIA's opponents are disappointing and have been found to be without merit." Newton Hospital did lose some potential patients, Senker said, especially maternity patients who felt they couldn't afford to give birth at an out-of-network facility. That created a trickle-down problem for some of the local obstetricians, who had to scramble to get privileges at neighboring hospitals or lose their Horizon patients. For Fred Nichols, a veteran Sussex County obstetrician, Newton's standoff with Horizon meant he faced the potential loss of 40 percent of his patients. Because childbirth is not usually considered emergency surgery, expectant parents were unwilling to risk paying hefty out-ofnetwork rates by having their baby at Newton. Most switched their deliveries to St. Clare's, in Denville, some 25 miles away. "They were scared enough of the financial impact that they were willing to travel," Nichols said. Finally, when it did not appear Newton Memorial and Horizon would ever reach an agreement, he concentrated his work in Denville instead of Newton Memorial. "As a solo practitioner, I couldn't be in two hospitals at one time, so the hospital lost all my deliveries because I took all my business elsewhere," he said. That amounted to 150 of the 600 births that took place at Newton annually, he said. He predicted the same problem would unfold for physicians at the Tier 2 hospitals who specialize in non-emergency services – particularly any kind of surgery. Obstetrics and orthopedics could be hit hard because patients can choose in advance where to have their surgeries, he predicted. That's already happened to one veteran OB/GYN in Edison. Charles Fleisch said he already lost a hysterectomy patient last month after she learned she'd have to pay a larger portion of the bill if he did her surgery at JFK Medical Center. Another patient, who is five months' pregnant, checked to make sure Fleisch was in the OMNIA plan when she selected it, not realizing that while he was in the plan, the hospital where he would deliver her baby was not. "How can I be in Tier 1 when the hospital's in Tier 2?'" he complained. "It never dawned on me til this happened." As for the Newton-Horizon dispute, it eventually ended with no clear winner. Despite the loss of some patients, the hospital was saved from economic disaster by a quirk in New Jersey law: State law guarantees that any patient who has to use the emergency room of an out-of-network hospital can't be penalized; their insurance company must cover the whole bill. That meant any Horizon customer who used Newton's ER was billed at the hospital's higher, out-of-network "sticker price," instead of a lower price it would have negotiated. The difference can easily be thousands of dollars. February 2016
5
"Our economic picture actually improved during the out-of-network period," Senker said. "That was the irony: Horizon actually ended up paying more." At the time the hospital pulled out of Horizon's network – or was pushed out, depending on one's point of view – Senker said he and his board figured the impasse would last three to six months. "We honestly thought they would come to their senses," he said of Horizon. Instead, the dispute lasted more than two years, until Newton Memorial was purchased by Atlantic Health System, the company that operates Morristown Medical Center in neighboring Morris County. That 2011 merger essentially folded the dispute into Atlantic's system-wide negotiations with Horizon, so neither side ended up capitulating. "We'll never know, absent the merger, what would have happened," said Senker, who now lives in South Carolina and is semiretired with his own health care consultancy. "Would we have gone back to the table, or would the standoff have continued?" For those three dozen hospitals that today face a future as second-tier facilities in the Horizon world, he has two pieces of advice: Make sure your quality ratings don't give any insurance company any grounds to exclude your facility, and work to explain the situation to staff, patients, and any larger employers in your market area. He said he doubted, however, that any hospital could continue to thrive if it kept losing patients seeking elective care and increasingly relied on emergency care instead - the formula that kept Newton afloat for more than two years. "Is it sustainable?" he asked, pondering the situation in which the Tier 2 hospitals now find themselves. "I would question that." As for Horizon, executives there point out their business is all about giving New Jersey consumers choices. They say early indications are that customers like the OMNIA product line. "Consumers deserve the right to make the healthcare choices they deem to be best for themselves and their families," said Vincz. "We cannot understand why anyone would oppose empowering consumers to take control of their healthcare choices,
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6 New Jersey Physician
Horizon’s value-based incentive program pays $3M to specialists By Anjalee Khemlani A value-based program's success resulted in $3 million in shared savings paid out by Horizon Blue Cross Blue Shield of New Jersey. The state’s largest insurer worked with 51 specialists statewide to help improve outcomes, reduce readmissions and lower the cost of care — and the results of 8,000 patients in 2014 show value-based incentives have positive results, according to a statement Tuesday. The specialists were paid a cumulative total of $3 million for success in the Episodes of Care program for 2014, Horizon said in a statement. Looking at five procedures that have a higher occurrences or readmissions, Horizon claims show significant reductions for specialists who participated in the program compared to non-EOC practices. There were 100 percent fewer hospital readmissions for knee arthroscopy, 37 percent fewer for hip replacement, 22 percent fewer for knee replacement and a 32 percent reduction in unnecessary C-section deliveries. Following the success with these four, as well as colonoscopies, Horizon is now adding more procedures to the program, including heart failure, hysterectomy, lung cancer, breast cancer and colon cancer. “These results demonstrate how Horizon and its providers are working collaboratively to move from a fee-based reimbursement system to one that improves the quality of care, enhances patient satisfaction and reduces costs.” said Lili Brillstein, director of the Horizon EOC program. “Rewarding doctors for quality, while wringing excessive, duplicative costs out of the delivery system, is at the core of value-based care.” The specialists received the bonus from shared savings on top of their traditional fee-for-service reimbursements. But the new incentive model is being applauded by users. “The Episodes of Care model is a game-changer in the progress from fee-for-service to value-based contracting,” said Charles Accurso, a Hillsborough gastroenterologist who is part of the Horizon program. “By tying financial incentives to quality, it improves the care of the patient while also decreasing costs.” This program is the latest in six years from Horizon, which now offers value-based programs used by 800,000 members as of 2015, it said in a statement. “For the last six years, Horizon has been collaborating with doctors and hospitals across the state to change the way health care is delivered and financed in New Jersey,” said Allen Karp, senior vice president of healthcare management for Horizon. “The results of our EOC program show how we can work together to make New Jersey’s health care system more coordinated and cost-efficient while raising the bar on quality.”
February 2016
7
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Hospital Rounds
Hospitals take next step in fight with state over OMNIA health plan By Eric Strauss A coalition of New Jersey hospitals and health systems said it has filed its first substantive brief in a lawsuit against the state Department of Banking and Insurance over Horizon Blue Cross Blue Shield of New Jersey's controversial OMNIA Health Plans. The hospitals were designated as “Tier 2” in the new tiered health plan from the state’s largest insurer, as opposed to a “Tier 1” designation that allows for greater savings for patients. The group is not suing Horizon, however, but challenging the state’s approval of the plan in September 2015. “We believe that DOBI has not ensured that the OMNIA plan has met network adequacy requirements and is not in the best interest of New Jersey’s health care system,” Steven M. Goldman, an attorney representing the coalition, said in a prepared statement. “The OMNIA plan, as approved, risks the stability and quality of the New Jersey hospital system. The approval of this plan ultimately does not benefit New Jersey residents and, therefore, the decision to approve the plan should be reversed. “By its own admission, DOBI has stated that no analysis was done to ensure that the insurer’s method of operation is not contrary to the public interest,” Goldman, a former DOBI commissioner, added. “The way in which this plan was approved is even more concerning for the public interest because Horizon is the largest state insurer and many of the Tier 1 hospitals are the largest hospital systems in the state. “While the concept of low cost/high value plans (is) praiseworthy, the OMNIA plan is not properly designed to achieve that goal. We are confident that the appellate court will agree with our assertions and will reverse the decision of DOBI by putting the public interest ahead of the interest of the state’s largest insurer.” Horizon spokesman Kevin McArdle responded, criticizing the suit: “Tiered plans have been offered in New Jersey for five years without any evidence of provider hardship. Lawsuits, billboards and websites aren’t going to lower the cost of health care in New Jersey. Opponents of change continue to ignore a very basic reality: The status quo in New Jersey is not sustainable for our state’s small businesses, families and taxpayers. “This suit seeks to take choices away from consumers, particularly the tens of thousands of previously uninsured, who want and need affordable health insurance and quality care, and it is reckless and wrong.” DOBI spokesman Marshall McKnight said that, due to the pending litigation, the department could not comment. The hospitals and health systems involved in the challenge include: • Capital Health System; • Centrastate Medical Center; • Community Hospital Group; • Holy Name Medical Center; • JFK Hospital Center; • Kennedy Health; • Our Lady of Lourdes Health Care Services; • St. Francis Medical Center; • St. Luke’s Warren Hospital; • Trinitas Regional Medical Center; • Valley Health System; and • Virtua Health. The case is before the Superior Court of New Jersey’s Appellate Division. Horizon is also the defendant in two separate lawsuits over OMNIA, and the plaintiff in another.
February 2016
9
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Two bills that would expand N.J. medical marijuana law debated The New Jersey Senate Health, Human Services and Senior Services committee considered two bills Monday that would benefit medical cannabis patients. The first was S2898 that would allow those diagnosed with Post Traumatic Stress Disorder or PTSD access to the state program. Currently only eight conditions, as well as being terminally ill, qualify patients for a registry card. Ken Wolski, executive director of the Coalition for Medical Marijuana New Jersey (CMMNJ) offered testimony in favor of the bill. "We believe it is a matter of of life and death because 22 [military] veterans commit suicide every day," said Wolski. A clinical study involving medical marijuana and PTSD should begin in 2016 and is lead by Dr. Sue Sisley. Working with the Multidisciplinary Institute for Psychedelic Studies and the University of Pennsylvania, it is the first to be approved by federal authorities. Dr. Sisley will administer federally grown marijuana to vets in Maryland and Arizona. Read more about the study here. Currently, Oregon, Arizona, Connecticut, Delaware, Illinois, Maine, and New Mexico allow PTSD as a qualifying condition. The Insurance Council of New Jersey testified that they would like an amendment to S2898 to clarify that health insurance providers would not be liable to pay for reimbursements related to medical marijuana if the bill passes. Yet the NJ Compassionate Use Act already covers this topic. The law itself says, "Nothing in this act shall be construed to require a government medical assistance program or private health insurer to reimburse a person for costs associated with the medical use of marijuana, or an employer to accommodate the medical use of marijuana in any workplace." Voting on the bill was held for the next committee meeting. The NJ Department of Health said in April that they were considering adding new conditions to law. The Compassionate Use Act was passed six years ago, and new conditions were supposed to be considered by the NJ DOH at least every two years. Yet panels to consider additional conditions have yet to convene. Up next was S3162, a bill to provide some level of employment protection for registered NJ medical marijuana patients. Senator Nicholas Scutari (D-Linden), who sponsored the bill, said in a statement, “Medical marijuana should be treated like any other legitimate medication use by an employee.” At issue during the discussion for the bill was the fact that standard urine drug screens do not measure actual cannabis impairment. Instead these tests indicate general marijuana use within the last 30 days. Cannabis remains one of the few substances where reliable standards of testing for impairment do not exist. Peter Rosenfeld of CMMNJ testified in favor of the bill. "Patients have to decide between treating with medical marijuana or being employed," said Rosenfeld. Rosenfeld cited several cases of patients being fired that received media attention. Charlie Davis was a procurement clerk for New Jersey Transit. When his position shifted, he was drug tested and suspended. He was told he would have to enter a drug treatment program and give up using medical cannabis if he wanted his job back. Davis sued NJ Transit. Don Dezarn was an 18 year employee of Princeton University in the food services department. The Army veteran became a New Jersey medical marijuana patient. When he disclosed that fact to his employer he was suspended and eventually released. Dezarn was cited along side me by federal National Park Service Rangers during the Smoke Down Prohibition protests. He was my co-defendant as we endured a federal trial, each of us for possessing half of a joint. Dezarn and I received the same sentence; two years of supervised probation and a $3,000 fine. Dezarn was allowed by federal probation officials to maintain his status as a medical marijuana patient. Yet, Princeton University cited their dependence on federal funding as their reason for not allowing any of their employees to be a state registered cannabis patient. Rosenfeld also spoke of his own experience at the hearing. He was a researcher at a company with federal contracts. He chose early retirement instead of possible dismissal. “The federal drug free workplace policy does not require monitoring of off workplace uses of medical treatment,” Rosenfeld testified. Testifying against S3162 were the N.J. Civil Justice Institute and the N.J. Food Council, both representing the sentiments of employers. February 2016
11
They said that the bill allowing for protections would put employers in a tough position trying to maintain drug-free workplaces. “There are a significant number of positions where someone using marijuana is not suitable for employment," Alida Kass of the N.J. Civil Justice Institute said. The bill would also try to eliminate discrimination against job applicants as well as existing employees. But the Americans with Disabilities Act and other laws including federal medical privacy protection laws do tend to apply in that arena. Because federal law still prohibits medical marijuana they do not apply to state level medical cannabis patients. The representative from the Food Council testified they did not want to have employees operating machinery, climbing ladders or using deli slicers if they were impaired by marijuana. The Food Council also suggested that low performing employees would seek a medical marijuana card for the sole purpose of bringing a lawsuit to challenge disciplinary action or termination. S3162 would not supersede language already in the Compassionate Use act regarding workplace accommodations, which essentially means registered patients are not guaranteed that they can keep a position their boss thinks they cannot perform while using cannabis. It also means employers do not need to have a space or time for patients to smoke, vaporize or otherwise consume medical cannabis while at work. The bill was approved by the committee today and released to the full state Senate.
Aetna, Meridian to debut co-branded, tiered accountable care health plan By Anjalee Khemlani Aetna and Meridian Health are launching a co-branded, tiered network, accountable care model health plan for employers. The new commercial health plan will be available July 1 for small and large employers, including self-insured businesses, in Monmouth and Ocean counties. Aetna will expand the plan, Aetna Whole Health – Meridian Health, into other New Jersey counties in the near future, and the plan will be available on the individual market in 2017, according to a statement from Meridian Health. Like other tiered network plans in the state, members benefit with lower out-of-pocket costs. For example, visiting a tier 1 provider means a lower copay — about $10 for a primary care visit versus $25 at a tier 2 provider, said Meridian Health Solutions Vice President Patrick Young. How this affects the anticipated merger of Meridian with Hackensack is still unclear, but Young said they are still separate entities, and only after the deal goes through can there be any understanding of how to move forward. But Young doesn’t expect any issues, since the payer strategy is similar to the arrangements with Horizon and AmeriHealth for their tiered network products, he said. “People say this is the wave of the future, but it’s already here,” Young said. The accountable care aspect is similar in format to the Medicare model, which is already implemented at Meridian, but stresses the idea of a clinically integrated network, Young said. Doctors who are part of Meridian Health Partners, doctors at Meridian hospitals and affiliated ancillary providers and independent physicians include more than 200 primary care physicians and 700 specialists, as well as six hospitals, as part of the plan, according to Meridian. A co-branded plan helps patients identify with the strong brand already established in the region by Meridian, Young said. Aetna currently pays 30 percent of claims for value-based care, with a goal of reaching 50 percent by 2018, and 75 percent by 2020, according to a statement. “Meridian Health and Aetna are helping to shift the health care industry from one focused on quantity of services to one that focuses on quality of care,” said Michael Costa, executive director of Aetna’s New Jersey operations. “We want our members to enjoy more healthy days, with reduced costs and improved efficiency.” Young added, “Innovative partnerships like this one with Aetna are helping us maintain this focus and transform the way care is delivered.”
12 New Jersey Physician
Seton Hall, HackensackUHN name 1st med school dean By Anjalee Khemlani
Seton Hall University and Hackensack University Health Network announced Dr. Bonita Stanton will be the founding dean of their school of medicine, starting next month. Stanton will lead the school, slated to open in fall 2018, with a global view of the medical world. In her years in the industry, she has worked with many populations in the U.S. and countries such as Bangladesh, China or Egypt, as well as sits on the editorial board of a number of journals. She is leaving Michigan, where she was vice dean of research at Wayne State University School of Medicine. “Whether working with low-income populations in the United States, women and children in Bangladesh, migrant workers in China or rural youth in Africa, Dean Stanton’s calling has been to bring the healing and compassion of health care to the world’s most vulnerable peoples,” Seton Hall President A. Gabriel Esteban said in a statement. “Working with major universities and hospitals, as well as the World Bank, the Centers for Disease Control and the World Health Organization, she exemplifies the servant leadership spirit that is a profound part of our mission at Seton Hall.” Stanton’s work has continuously been funded by the National Institutes of Health, Robert Wood Johnson Foundation, the Fogarty Foundation, the World AIDS Foundation, Josiah Macy Jr. Foundation and the Commonwealth Fund, according to Wayne State. She has also consulted with numerous groups, including the World Bank, World Health Organization, UNICEF, PATH and the International Vaccine Institute. “We proudly welcome Dr. Bonita Stanton as the founding dean of our new medical school,” said Robert Garrett, CEO and president of the Hackensack University Health Network. “Our rigorous search yielded outstanding candidates from across the nation. President Esteban and I are confident that Dr. Stanton, with her outstanding background and accomplishments, will lead this school of medicine to become one of the finest in the U.S., while maintaining our shared tradition and mission to educate the physicians of tomorrow in a groundbreaking, collaborative environment.” Stanton is charged with helping New Jersey curb the shortage of physicians in the state, which is estimated to be 2,500 fewer than needed by 2020, according to Hackensack. The partnership will allow students from the school to have a clinical teaching environment in the health system, and Seton Hall plans to co-locate its College of Nursing and School of Health and Medical Sciences in the new facility. This move aligns with the way health care is provided today, with teams of medical professionals working outside of their respective silos, Hackensack has previously said. The school and health system signed an agreement in June 2015, and have since received a $16.9 million award from the New Jersey Economic Development Authority’s Grow NJ program. The School of Medicine, which is slated to accept its first students within two years, has already received preliminary approval from the New Jersey Board of Medical Examiners, subject to seeking preliminary accreditation from the Liaison Committee on Medical Education — which requires a dean appointment prior to approval, according to Hackensack. “My career has focused on improving health outcomes for all persons, regardless of race, ethnicity, socioeconomic status and geographic location,” Stanton said. “I share the widespread concern that U.S. health care costs are among the highest in the world, but our health outcomes are only fair in comparison with all nations and poor in comparison with our socioeconomic peer nations. Extensive research speaks to the importance of delivering preventive and curative care with a far greater emphasis on community-based services, reserving our tertiary hospitals for technologically complex procedures and treatments and the very ill.”
February 2016
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