Another N.J. hospital drops lawsuit to gain access to Horizon's discounted plans

Horizon Blue Cross Blue Shield of New Jersey and CentraState Medical Center settled a lawsuit Thursday the hospital had filed demanding it be included in the preferred Tier 1 of the OMNIA plans, which offer patients the most discounts. (Matt Smith | For NJ Advance Media) (Matt Smith*)

CentraState Medical Center in Freehold Thursday became the latest hospital to drop a three-year-old lawsuit against Horizon Blue Cross Blue Shield of New Jersey that accused the state's dominant health insurance provider of squeezing community hospitals out of the market.

CentraState was once one of seven hospitals that sued Horizon for relegating them to a more expensive tier in the company's OMNIA discount health plans, which Horizon said would revolutionize health care options in the state.

Valley Hospital in Ridgewood, the last plaintiff in the case, and Horizon are scheduled to square-off in a state Superior Court Bergen County on Monday, Valley's attorney Michael Furey said.

The lawsuit accuses Horizon "breached its duty to act in good faith" by relegating the hospital to OMNIA's second tier, costing the hospitals -- smaller, independent and largely Catholic hospitals -- millions of dollars.

According to once-confidential documents NJ Advance Media obtained through a lawsuit, Horizon did not select tier 1 hospitals based on lower costs. The largest hospital systems came out ahead even if smaller competitors scored better on quality measures.

OMNIA's 400,000 policy holders are able to save thousands of dollars more in copays and deductibles by using 39 "tier 1" hospitals and medical professionals, which have agreed to Horizon's terms to accept lower reimbursements in exchange for higher patient volume. Consumers can use "tier 2" hospitals and doctors but they will pay more to do so.

In a joint statement Thursday, Horizon and CentraState officials said they were "pleased to put our differences behind us and to recognize that working collaboratively to improve the quality of care, lower costs and enhance the patient experience is better than continuing to focus on differences."

CentraState will remain a Tier 2 hospital, the announcement said.

Next year, the hospital's orthopedics and maternity/newborn care programs will "accelerate the development of value-based care initiatives" which focus on preventive care.

"CentraState and Horizon will continue our long history of working together to transform the healthcare system to one that promotes health and wellness over sick care and shifts the focus from the volume of care delivered to the quality of outcomes and the value of care achieved."

The original seven hospital systems suing Horizon were Capital Health System in Trenton and Hopewell; Centrastate; Holy Name in Teaneck; JFK Medical Center in Edison; St. Luke's Warren Hospital in Phillipsburg; Trinitas Regional Medical Center in Elizabeth and Valley Hospital in Ridgewood.

Holy Name Medical Center in Teaneck withdrew its claim against Horizon for an undisclosed financial settlement in July.

Saint Peter's University Hospital in New Brunswick filed a separate lawsuit to challenge its tier 2 designation.

Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook.

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