Christie Discloses Horizon Violations in Unusual Attack

The governor has been trying to raid the reserve fund kept by New Jersey's largest health insurer, and redoubled his attacks Wednesday.

Chris Christie. Tim Larsen/Governor's Office

Gov. Chris Christie launched a new broadside Wednesday against the health insurance company that has become his white whale and nemesis this year amid an increasingly strange sequence of events.

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At a news conference in Trenton, Christie took the unusual step of announcing a series of violations at Horizon Blue Cross Blue Shield, which was fined $15.5 million by the state Department of Human Services on Monday for incorrectly processing “hundreds of thousands” of Medicaid claims after an internal overhaul in April 2016, he said. The company said it will challenge the sanctions and added that Christie seemed to be on a vendetta.

Christie has been trying to persuade recalcitrant state lawmakers to pass a bill that would raid around $300 million a year from the $2.4 billion emergency reserve fund kept by Horizon — New Jersey’s largest health insurer — and devote the money to a new state-run fund to treat drug addiction. It’s the centerpiece of Christie’s effort to stem the growing heroin death epidemic during his last year in office.

And the violations, he said, were a prime example of why lawmakers needed to clamp down on the insurer. The governor’s proposed legislation — which has failed to get public support from a single lawmaker, Democrat or Republican — also includes provisions that would add four political appointees to Horizon’s board and force it to post executive compensation online.

“We must demand answers,” Christie said. “We must discover what else Horizon’s well-paid lobbyists and secretive executives are hiding from us.”

He went on to lob several insults at some of those executives, repeatedly denouncing Horizon’s “multimillion-dollar public relations team.” He called a recent interview that Horizon CEO Bob Marino gave “pathetic” and disputed an assertion by Marino that Christie’s proposal would hike premiums for consumers. He taunted the company’s top corporate and regulatory affairs executive, Bill Castner, who was “never really good” at math, Christie said. He also threw in a jab at S&P Global Ratings, which said it might downgrade Horizon if Christie signs his plan into law.

It was all very spicy, even for a governor who already had been hunting Horizon this year with the tenacity of Captain Ahab. Lawmakers and industry experts say they don’t know how the not-for-profit insurer ended up on Christie’s cross hairs or why he’s on a mission to clamp down on one private company after years of branding himself as a conservative champion of the free market.

Standard DHS practice is not to announce or post information online regarding Medicaid contract violations like Horizon’s, Christie acknowledged. After the governor’s news conference, the department declined to release its notice of sanctions on Horizon to members of the news media, citing concerns about potentially disclosing “proprietary information.”

But the clock is ticking toward the end of Christie’s term, and the state budget due in nine days is his last big chance at implementing major policies. With a 15 percent approval rating and no traction so far on his Horizon proposal, some political watchers saw Christie’s news conference as a “desperate times call for desperate measures” scenario.

Christie gathered the press for his announcement a day after meeting with Assembly Speaker Vincent Prieto (D-Hudson) and Senate President Steve Sweeney (D-Gloucester) to wrap up budget negotiations. The Horizon news conference seemed to be an effort to build pressure for a budget deal he apparently wants to lock down before the July 1 constitutional deadline, although Christie said he was not trying to “bully” the company.

Several lawmakers said after a caucus meeting of the Assembly Democrats on Wednesday that the governor offered to approve Prieto and Sweeney’s plan to add $125 million in education funding to the $35 billion budget plan for fiscal 2018, provided they passed the Horizon bill and separate legislation to fold the New Jersey lottery into the pension system for public workers.

Christie didn’t deny it Wednesday but said he would not discuss his negotiations with the two legislative leaders. For his part, Prieto has said the Horizon plan has no support among Assembly Democrats and will not get a vote. Asked Wednesday about the plan, he said “everybody knows where I stand.

Of Horizon’s 3.8 million policyholders, nearly 2 million are insured by government agencies or the state’s Medicaid program. Therefore, any adverse effects on the company’s finances stemming from Christie’s plan could have a sweeping effect on New Jersey’s health care landscape and economy, especially if those changes were compounded by a rollback of Medicaid currently under consideration in the Republican-controlled Congress.

Christie said there was nothing to fear because under his plan, the state would only be skimming the “excess surplus” once a year after the company completed all its financial analyses and set its rates. Marino has said the governor’s raid nevertheless would hike premiums for individual consumers by $600 and $1,700 for a family of four.

Aside from the $15.5 million in sanctions issued by DHS this week, Horizon also was fined by the state Department of Banking and Insurance twice in the last year, Christie pointed out.

“Horizon and a vendor improperly processed claims of home health care and hospice providers between July of ’15 and March of ’16,” he said. “The issue resulted in Horizon’s improper denial of 4,500 claims by home care and hospice patients they were insuring.” (That was a $400,000 fine.)

In a separate case after Horizon overhauled its Medicaid operation in April 2016, Christie added, “Horizon’s new system failed to generate almost 9,500 statutorily required overpayment recovery notices to over 1,100 Medicaid providers between September of ’16 and ’17.”

“What this meant is that providers didn’t receive any of the legally required notices that they may have been overpaid by mistake by Horizon — and Horizon went in anyway with no notice to them to charge back over $8.1 million in claims to providers who were taking care of the poorest and most vulnerable in our society,” he said. (That was a $150,000 fine.)

That was all public information available online. But the fine imposed by DHS was a more sensitive matter subject to some legal restrictions on the disclosure of its terms, making Christie’s extended commentary on Wednesday somewhat puzzling.

In a lawyerly recap, Christie said DHS sent a notice of sanctions on Monday to Horizon and he then went on to describe the violations at length and in detail to reporters and charged that the company was lining its pockets at the expense of the vulnerable populations that depend on Medicaid. Christie said DHS acted independently and began its investigation nearly a year before he rolled out his Horizon plan in February.

“Through its failure to have a functioning claims system, member and provider information system, and coordination between the two functions, Horizon just brazenly failed their members and the citizens of New Jersey who pay them,” Christie said. “The net result was a significant increase in claims that were backlogged, a significant increase in unpaid claims, a significant increase in incorrectly paid claims, a significant in in untimely denial of claims, and a significant increase in the untimely payment of claims.”

But neither his office nor DHS released the letter itself because its contents could include “proprietary information” that might give Horizon’s competitors an improper market advantage, DHS officials said.

Observer was advised by a DHS official to submit a request for the letter under the New Jersey Open Public Records Act. That request was not immediately fulfilled on Wednesday, and DHS said it needed Horizon to sign off on the disclosure first under the terms of its contract. The department said it might also redact some information before any release. A separate request for the letter made directly to Horizon also was declined Wednesday.

In a lengthy statement, Horizon spokesman Kevin McArdle said the company was “blindsided by both the timing and severity of this action” and that Christie’s comments “strongly suggest that this is further retaliation for Horizon’s unwillingness to submit to his demand for $300 million from the reserves we hold to protect our members and an abuse of power.”

“In 2016, with the approval of the administration and for the purpose of creating substantial savings for the state, Horizon NJH undertook a complicated transition transferring responsibility for Medicaid claims processing to a different vendor, one expected to help lower costs over time,” McArdle said. “Horizon NJH recognized that such transitions are difficult and voluntarily reported to the state problems associated with the implementation that resulted in payments being delayed to some providers. The problems have since been remediated and our current claims payment timeliness complies with both the contract and all state regulations. We are not aware of a single member whose care was impacted in any way.”

The company will be challenging the DHS fine because its conclusions were based on faulty data, he added.

Christie said that he had lined up sponsors for his Horizon plan and that it’s very common for the Legislature to fast-track big bills in the last week of the fiscal year. But he didn’t name any of the sponsors, and so far this year the proposal has been political kryptonite.

Democrats, Republicans, liberals, conservatives, business groups, labor groups, mayors, Republican gubernatorial nominee Kim Guadagno and Democratic nominee Phil Murphy, Steve Forbes and Donna Brazile, and a group called the Tea Party Patriots are all opposed.

No state lawmakers have announced support for the plan, but Christie suggested they might come out of the woodwork soon because “they love sending out those press releases.”

The only press release from a lawmaker on Wednesday came from state Sen. Richard Codey (D-Essex), another Christie nemesis.

“Governor Christie’s ultimatum tying the funding for our children’s education to him getting his way in grabbing $300 million from our state’s largest health insurer at a time of extreme uncertainty in the healthcare market is a shot at our kids and a shot at all of our health care protections,” Codey said.

Christie Discloses Horizon Violations in Unusual Attack