Insurer, hospital escalate tensions

Insurer, hospital escalate tensions
by Meir Rinde/The Times
Friday August 14, 2009, 1:10 PM

TRENTON - Less than two days remain until thousands of patients could lose their in-network coverage at Capital Health's Fuld campus because of an increasingly bitter dispute between the hospital and Horizon Blue Cross Blue Shield of New Jersey.

Capital Health's chief executive yesterday accused the insurer of scaring patients and doctors and demanding ruinous cuts in reimbursement rates paid to the Brunswick Avenue hospital, even as negotiations continued down to the wire.
Cie Stroud/For The TimesPeople crossing Brunswick Ave. in front of the Capital Health System Fuld Campus facility in Trenton.

Meanwhile, Capital Health took out full-page advertisments in local newspapers to publicize its position in the talks with Horizon, while the insurer's dirigible, emblazoned with the company name, was spotted yesterday afternoon flying over Trenton.

"Horizon intentionally, and based on a strategic plan, creates this incredibly intimidating and negative environment by design," Capital CEO Al Maghazehe said yesterday. "Everywhere they go, it's the same. They're using my patients to put pressure on me."

A Horizon spokesman rejected Maghazehe's accusations, saying Fuld's high rates are unfairly forcing the insurer's members to pay for a new hospital Capital Health is building in Hopewell Township. He said the company has for years refused to negotiate lower rates, and he criticized its media campaign against Horizon.

"For them to suggest that we are not negotiating in good faith, when they're in the newspapers and now on radio, saying we're putting "profits ahead of patients,' is the height of hypocrisy," Horizon spokesman Thomas Rubino said.

Horizon will begin running advertisements giving examples of Capital Health's high rates, he said.

The dispute now coming to a head first sprang into public view in early July, after Horizon sent letters to 92,000 of its members saying in-network coverage for state workers at Fuld would expire shortly and coverage at the system's Mercer campus on Bellevue Avenue would end in January.

The coverage at Fuld will end Saturday at midnight unless the two sides reach an agreement or the insurer agrees to extend the deadline. Without an agreement, patients will have to pay much higher rates or switch to other hospitals.

The letters caused consternation among patients who feared having to leave a hospital they had used for decades, and drew the attention of legislators who urged the two sides to avoid disrupting patient coverage.

Last month, Assembly members Linda Greenstein, Wayne DeAngelo and Bonnie Watson Coleman called for a swift resolution to the impasse, and yesterday, Sen. Bill Baroni wrote to Maghazehe and Horizon President William Marino saying his office had received "countless phone calls" from concerned residents.

"It is imperative that both Horizon and Capital Health immediately begin round-the-clock negotiations to resolve the impasse that exists between your two companies," he wrote.

In an interview in his office at Fuld yesterday, Maghazehe said he was being besieged by doctors who fear they will no longer be able to see very ill people they have been treating for years.

He was scheduled to meet nephrologists this morning to discuss what they should tell their dialysis patients, he said.

Maghazehe charged that Horizon has a philosophy of threatening hospitals to win concessions, as shown by its disputes with two Philadelphia hospitals last year and ongoing legal battles with Bayonne and Newton Memorial hospitals in New Jersey.

He accused Horizon of sending the letters before it even notified him of the imminent termination of its contract with Capital Health. However, Rubino said the insurer had already terminated the contract and was obligated to tell its members.

Rubino also said the termination followed an increase in rates by Capital Health for both its hospitals that went into effect in January.

After the letters went out, the two nonprofit organizations went through several rounds of negotiations, and as of yesterday had agreed to most of the terms of coverage for patients at the Mercer campus, Maghazehe said. That hospital is scheduled to close in 2011, when the Hopewell facility opens.

But the two sides were still "miles apart" on terms for Fuld, he said. The hospital has cutting edge technologies - particularly a new $30 million lab to treat strokes and other brain injuries - and needs higher reimbursement rates to avoid regressing to "mediocrity" and its financial struggles of the late 1990s, Maghazehe argued.

"Fuld has services that no other hospital in the region has and that few in the state have. That's very, very expensive," he said. "Our job is to make as much money as we can, legally, so we can do better and move forward for our patients."

Rubino argued that it is Horizon's job to provide affordable coverage to members who are struggling with health insurance costs, not to subsidize Capital Health's construction of a $530 million medical center in Hopewell Township and an additional $100 million in renovations at Fuld.

"They're building a new hospital, they're spending over $600 million, and they want Horizon members to foot the bill," he said. "They're clear about that. They basically want to tax Horizon members for their huge new hospital in Hopewell and these renovations, and that's not acceptable."

Both sides said yesterday afternoon that an agreement was still possible by tomorrow, though a Capital Health spokeswoman said doctors had begun receiving notices from the insurer saying they should stop sending patients to Fuld.

If the termination goes through, it will affect 3,000 Horizon members who go to Fuld, Rubino said. They will still be able to use the Mercer campus at least through January. Horizon, based in Newark, has 3.9 million members.

The dispute is part of a larger struggle over how to fund health care coverage, particularly in places like Trenton with large numbers of undocumented immigrants and other uninsured residents. Ten hospitals have closed in New Jersey since 2007, and six have filed for bankruptcy.

Hospitals in New Jersey are required to treat emergency patients, and reimbursement rates from state and federal insurance and charity programs do not fully cover their costs, Maghazehe said.

Private insurers and their members must continue to help cover the cost of treating the uninsured, he said.

"I don't want to be held responsible for all the problems society has," he said. "I don't have enough resources for that."

http://www.nj.com/mercer/index.ssf/2009/08/insurer_hospital_escalate_tens.html