- Horizon Blue Cross Blue Shield of New Jersey and Hackensack Meridian Health notified customers last month that they were deadlocked on a new contract.
- The stalemate raises the prospect that Horizon’s commercial customers will see Hackensack Meridian’s 18 hospitals shift out of network.
- Driving the turmoil: Health care spending, which grew 4.1% a year during the 2010s, has gained momentum.
It seems to happen more often: An insurer and health care network can’t agree on a contract. They warn that without a resolution, customers will need to find another provider who is in network or pay more for their care, knowing they can’t change insurers until the new year.
A state lawmaker wants to put an end to that.
State Sen. Holly Schepisi plans to introduce a bill this week that would let consumers re-enroll in a different insurance plan if their provider networks change in the middle of the year.
“This is becoming more commonplace between the large hospital networks and medical providers and the insurance companies, and the only people who end up getting hurt are the consumers and the patients,” said Schepisi, R-Bergen.
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Schepisi is proposing the idea after two of the state’s biggest health care companies — Horizon Blue Cross Blue Shield of New Jersey and Hackensack Meridian Health — notified customers last month that they were deadlocked on a new contract.
The stalemate raises the prospect that Horizon’s commercial customers will see Hackensack Meridian’s 18 hospitals — including Jersey Shore University Medical Center in Neptune, Hackensack University Medical Center and JFK Medical Center in Edison — effectively shift from in-network to out-of-network beginning June 1.
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Driving the turmoil: Health care spending, which grew 4.1% a year during the 2010s, has gained momentum. It rose 7.5% in 2023, according to Kaiser Family Foundation, a research group, and projections from other analysts predict faster growth in 2025.
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Hackensack Meridian sent letters in January to Horizon customers, warning them that the two sides couldn’t reach an agreement on a new contract and it was removing its hospitals from the insurance company’s in-network provider list.
Federal regulations require Hackensack Meridian to allow Horizon patients to continue their care until June 1. After that, customers with a terminal illness, a serious or complex condition, behavioral health services, a non-elective surgery or pregnancy could continue to receive care for another 90 days. Other patients could continue to visit the hospitals, but they would pay more out of pocket.
The dispute doesn’t apply to customers covered through Medicaid or its Braven Medicare Advantage plan. And it doesn’t apply to Hackensack Meridian physicians such as primary care providers.
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Horizon said it is continuing to work with Hackensack Meridian on an agreement. But it noted the health provider, already among the most expensive hospital systems in New Jersey, is seeking an increase that is much higher than the rate of inflation, leading to higher out-of-pocket costs and premiums.
Hackensack Meridian said the reimbursement rates offered by Horizon were inadequate. But it “remains committed to reaching an agreement with Horizon and ensuring that all HMH patients can access their trusted HMH hospitals and physicians,” officials said Tuesday.
Consumers hold the bag
The dispute leaves consumers vulnerable to losing their care.
Consumers typically pick an insurance plan that has a network of providers and goes into effect Jan. 1. If they want to change, they have to wait until the fall to shop for a new plan that would begin the following year.
The rules are designed to make sure consumers don’t wait until they get sick to buy insurance, keeping healthy people in the pool and preventing rates from skyrocketing.
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But the contract between an insurance company and health provider could end in the middle of the year, and consumers could lose providers they assumed would be in their network.
“Unfortunately, the consumer is left in the middle,” said Dane Mihlon, a Shrewsbury insurance broker who, along with his wife, chose Horizon this year because their providers were in network. “In fairness to brokers or people that negotiate these, they don’t see it coming a lot of times. So they look bad. Everybody looks bad.”
“You’re holding the consumer hostage again,” he said. “That’s probably what I hate about it most.”
Lawmakers scramble for solutions
Hackensack Meridian went through a similar battle last summer when reached a stalemate with Aetna’s Medicare Advantage plan, sending letters to thousands of customers warning them that its providers would become out-of-network if it couldn’t reach a deal. Those companies settled two weeks before Hackensack Meridian dropped out of Aetna’s preferred network.
State and federal legislators said their offices have received phone calls from consumers worried that they will need to find a new hospital to continue their treatment. They have urged Horizon and Hackensack Meridian to reach an agreement. But for now, consumers are left to watch the negotiations play out.
U.S. Rep. Frank Pallone, D-N.J., sponsored the federal No Surprises Act that took effect in 2022 and requires providers and insurers to continue care for patients with serious illnesses for 90 days. He said in an interview he has asked Horizon and Hackensack Meridian executives for weekly updates.
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“I’m open to anything that puts the consumer first right now,” he said. “The main thing is the continuity of care. There’s nothing that says that you can get out of your contract and go somewhere else, because you have your open enrollment season, and then that’s it for the year. But if there’s some way to change that, I would be open to it.”
Sen. Schepisi is taking a shot at it. Her proposed legislation would create a special enrollment period for consumers whose networks change mid-year, giving them a chance to find a different insurer.
Both Hackensack Meridian and the New Jersey Hospital Association seemed to support Schepisi’s idea. Ward Sanders, president of the New Jersey Association of Insurance Providers, said he didn’t yet have a view on it.
The bill wouldn’t come without complications in the intricate health care system. For example, it isn’t clear if consumers covered through private employers, which is typically governed by federal law, would be protected.
But state Sen. Joseph Vitale, D-Middlesex, said the idea made sense to him.
“The consumer gets caught in the middle of all their negotiations,” Vitale said. “Who’s right, who’s wrong, who cares? What matters is people get coverage.”
Michael L. Diamond is a business reporter for the Asbury Park Press. He has been writing about the New Jersey economy and health care industry since 1999. He can be reached at mdiamond@gannettnj.com.
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