Bergen County Superior Court Judge Robert Contillo issued a recent decision deemed favorable by Horizon Healthcare Services Inc. (“Horizon”) in a case involving three healthcare providers (“Providers”) that challenged Horizon’s newer tiered health coverage plan for hospitals: OMNIA. The Providers alleged that Horizon unfairly designated them as Tier 2 Providers, a tier in which OMNIA Members access providers while incurring higher out-of-pocket costs than they would when accessing those providers in Tier 1. Although certain other claims may proceed, Judge Contillo dismissed the breach of contract claim because he determined that Horizon did not breach the network hospital agreements by “failing to include [the Providers] in Tier 1” because “[t]he plain and unambiguous language [under the agreement] does not guarantee that [the Providers] be included in Horizon’s new products, networks or subnetworks.”
This decision illustrates that tiered designation disputes between hospitals and payors may hinge on the language of the applicable network hospital agreements. Hospitals and other providers are encouraged to review their existing contracts and address this issue in future contracts to determine the level of discretion payors may have in including them in tiered and limited network products. As insurers continue to develop new products designed to lower costs, this will continue to be an important consideration for most providers.
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