New Jersey extends controversial state employee benefits contract with Horizon BCBS

New Jersey has extended its employee benefits contract with Horizon BCBS despite state officials and media reports alleging that previous contract terms have not been upheld by the payer, Bloomberg reported Jan. 4.

Horizon's contract is worth about $136 million annually and provides health coverage to 600,000 state employees, retirees and their dependents.

In the new contract, the state won't pay as much in exchange for reduced services, specifically removing a care price comparison tool for employees.

According to a Bloomberg report from June, the former state employee who oversaw the health plan alleged in 2021 that Horizon never provided the navigation tool worth $34 million — a complaint that Horizon "disagrees with and has responded to."

In December, Bloomberg obtained records showing the state sometimes paid hundreds of thousands of dollars over what hospitals charged for a single hospital stay. 

In one case, a hospital billed $674,856 for a patient's hospital stay, but the state's health plan paid over $2 million to the provider.

Horizon and the state's contract bars overpayments and partially reimburses the state if the payer doesn't meet specific medical cost limits. Horizon negotiates prices with providers, while the state pays medical expenses out of pocket. In 2020, the company paid a $24 million fine for increasing costs higher than the agreed rate. 

A spokesperson for the state told Bloomberg that it is investigating the overpayments and "aggressively enforcing" its contract with the payer. A spokesperson for Horizon said it disagrees with New Jersey's claims it is not complying with the contract.

In November, New Jersey's police union pressed state officials to divulge whether Horizon would face financial penalties following 20 percent higher premiums among some public employees.

"According to the state and its consultants, Horizon has met those cost benchmarks," a Horizon spokesperson told Bloomberg in September.

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