N.J. Blue Cross may cut Philadelphia hospitals from coverage

In the midst of its campaign to convert into a for-profit company, Horizon Blue Cross Blue Shield of New Jersey is threatening to cut two Pennsylvania hospital powerhouses out of its treatment networks.

Horizon has notified subscribers that it is terminating contracts with Children's Hospital of Philadelphia and the University of Pennsylvania Health System when they expire in, respectively, November and December. Roughly 28,000 subscribers use those facilities.

Horizon said subscribers would be charged out-of-network fees for using Children's and its facilities in New Jersey after March 11. Penn's three hospitals - Hospital of the University of Pennsylvania, Pennsylvania Hospital and Penn Presbyterian Medical Center - would be out-of-network after April 11.

The showdown is the latest in a series of disputes between insurers and hospitals or large physician groups over the last few months.

Historically, most are settled before the contracts expire. However, the contract between Temple Physicians Inc. and Keystone Mercy Health Plan expired last month when the two could not reach agreement. And Children's no longer has a contract with Horizon NJ Health, Horizon's subsidiary for Medicaid recipients. Children's filed a lawsuit late last year against Horizon NJ Health for terminating the contract, failing to pay $20 million in claims and allegedly steering its subscribers to New Jersey hospitals.

On its Web site, Horizon Blue Cross Blue Shield said payments to the Philadelphia hospitals were "simply too high and unsustainable."

In an interview, Jim Albano, vice president of health-care services for Horizon, said Children's and the Penn system wanted to be paid significantly more than competitors in New Jersey. "We have no problem with either or both being in our network," he said. "This is really about the conditions under which they're in our network."

In its lawsuit, Children's, which draws about 25 percent of patients from New Jersey, alleged Horizon NJ Health had been pressured by New Jersey officials to keep Medicaid dollars in New Jersey.

Albano responded that government leaders were not involved in this decision. "There's no pressure on us to keep business in New Jersey, although frankly that is one of our objectives as a New Jersey-based company. We have a relationship with and an interest in the viability of hospitals in New Jersey."

The other out-of-state providers in Horizon's network in this region are Thomas Jefferson University Hospital, St. Christopher's Hospital for Children and A.I. duPont Hospital for Children.

Carl Anderson, a 64-year-old Ewing, N.J., man who received liver and kidney transplants at Hospital of the University of Pennsylvania, was dismayed when he received Horizon's notice. He almost died of infections before the transplants. HUP got him through that and then the transplants, he said. "They saved my life twice," he said.

"We're going to find a way one way or another to stay with HUP," he said.

Albano said Children's and Hospital of the University of Pennsylvania provide some transplant services not readily available in New Jersey. Under some circumstances, Horizon will continue to pay for them in-network, he said.

On the other hand, he said, there is no need for subscribers to cross the river for routine births. "There are members having routine deliveries done at CHOP," Albano said. "There's absolutely no clinical reason for that to happen."

Albano said 80 percent of the subscribers who use Children's and the Penn hospitals will still have in-network access because of a reciprocal arrangement with Independence Blue Cross in Philadelphia. Albano said Horizon could save more money by reimbursing Independence Blue Cross, which it believes pays lower rates, than it would by negotiating its own rates.

Penn said it was "surprised and disappointed by Horizon's decision."

Children's said Horizon was demanding to pay less than its competitors and suggested patients look for a different insurer.