Products are provided by Horizon Blue Cross Blue Shield of New Jersey; Horizon Insurance Company; Horizon Healthcare of New Jersey, Inc.; Horizon Healthcare Dental; Horizon Casualty Services, Inc.; Horizon NJ Health; and/or Braven Health. Each company is an independent licensee of the Blue Cross Blue Shield Association. Communications may be issued by Horizon Blue Cross Blue Shield of New Jersey in its capacity as administrator of programs and provider relations for all its affiliates. The Blue Cross® and Blue Shield® names and symbols are registered marks of the Blue Cross Blue Shield Association. The Horizon® name and symbols are registered marks of Horizon Blue Cross Blue Shield of New Jersey. The Braven HealthSM name and symbols are service marks of Braven Health. © 2025 Horizon Blue Cross Blue Shield of New Jersey. Three Penn Plaza East, Newark, New Jersey 07105. ECN0025673C (1125)
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This settlement resolves a dispute dating back to 2021 concerning how a small number of claims were paid by Horizon on behalf of the State Health Benefits Program and School Employees’ Health Benefits Program (SHBP/SEHBP). This dispute does NOT deal with typical claims submitted by doctors, as falsely claimed by the Attorney General. Horizon will pay the State $100 million as part of the settlement. We tried to resolve this disagreement in good faith more than four years ago.
Regardless of the grossly false and inflammatory language used by the State Attorney General, or any attempt by anyone else to mischaracterize this as the Attorney General did, this is a straightforward contract dispute. Horizon has always acted properly and with integrity throughout our 60-year-long, mutually beneficial relationship with the State. In the spirit of the partnership that has been the foundation of our relationship, we reached this agreement to resolve the disputed claims and avoid protracted litigation.
It is especially disappointing for the Attorney General to waste time and taxpayer resources to achieve this outcome. He has turned a contract dispute into a media circus by hurling loaded, false and dangerous accusations at Horizon for his own personal and political benefit.
Understanding Horizon’s Settlement With the State of New Jersey
Your Questions Answered
A Reminder
DRAFT
Since its founding nearly 100 years ago, Horizon has had a long and positive history of partnering with the State and other public employers. Those partnerships, built on a hard-earned foundation of trust, have provided best-in-class service and unsurpassed access to high-quality health care for millions of public employees while saving them, and their employers, billions of dollars.
Integrity and accountability are the foundation of our commitment to service excellence, which is reflected in the fact that 95% of eligible SHBP and SEHBP members choose Horizon. We remain dedicated to providing SHBP and SEHBP members with access to quality, affordable health care.
Since 2020, the steep discounts achieved through Horizon’s provider contracts produced $42.6 billion in savings to the SHBP, SEHBP and its members.
Horizon enters this agreement in the spirit of good faith and partnership – values that have always defined our 60-year-long, mutually beneficial relationship with the State.
The Facts:
DRG pricing is used by Medicare, New Jersey’s Medicaid program, and health insurers across the country as an effective way to control health care costs. In fact, it has been used by the SHBP for decades. By encouraging hospitals to deliver efficient care, DRG pricing can - in very limited cases - result in a payment for a specific service that is higher than a hospital’s standard charge. Even though that can happen, DRG pricing reduces the total amount paid to a hospital for the overall care they provide to patients covered by a health plan and lowers costs for customers and members.
By 2023, we had fully resolved the underlying issues that led to the contract dispute, and in 2024, were again chosen as an administrator of SHBP and SEHBP benefits.
Since 2020, Horizon has processed more than 48 million claims for the State and made $20 billion in related payments to providers.
Of the $100 million settlement, $93 million covers the difference in claims payments that were in dispute and that Horizon has been seeking to resolve for more than four years.
While the State's interpretation of one aspect of the contract differed from Horizon’s, the settlement makes it clear that Horizon never retained any portion of monies charged to the State for health care provider claims.
Horizon paid claims we processed for the State according to the contracts in place with the doctors and hospitals. The matter primarily involved just a handful of health systems - more than half the disputed claims were from hospitals outside of New Jersey with one of every three claims in dispute coming from a single health system in New York City.
This settlement involves 0.07% of those claims and 0.46% of the total amount paid to providers. Almost all of the disputed claims are complex, in-patient hospital claims for SHBP members.
The disputed claims were paid under contracts that include industry standard contracting methods including Diagnosis-Related Group (DRG) pricing, a contracting strategy that pays a fixed rate based on the patient’s condition instead of totaling up all the individual procedures or treatments a patient got while in the hospital. DRG pricing rewards efficient hospitals and incentivizes them to deliver effective care, reduce waste, and avoid unnecessary treatment that does not help a patient get better.
Setting the record straight - How DRG pricing really works
Since 2020, the steep discounts achieved through Horizon’s provider contracts produced $42.6 billion in savings to the SHBP, SEHBP and its members.
DRG pricing is used by Medicare, New Jersey’s Medicaid program, and health insurers across the country as an effective way to control health care costs. In fact, it has been used by the State Health Benefit Plan for decades. By encouraging hospitals to deliver efficient care, DRG pricing can - in very limited cases - result in a payment for a specific service that is higher than a hospital’s standard charge. Even though that can happen, DRG pricing reduces the total amount paid to a hospital for the overall care they provide to patients covered by a health plan and lowers costs for customers and members.
While the State's interpretation of one aspect of the contract differed from Horizon’s, the settlement makes it clear that Horizon never retained any portion of monies charged to the State for health care provider claims.
Of the $100 million settlement, $93 million covers the difference in claims payments that were in dispute and that Horizon has been seeking to resolve for more than four years.
Since 2020, Horizon has processed more than 48 million claims for the State and made $20 billion in related payments to providers.
By 2023, we had fully resolved the underlying issues that led to the contract dispute, and in 2024, were again chosen as an administrator of SHBP and SEHBP benefits.
The Facts:
What is Diagnosis-Related Group (DRG) Pricing?
DRG pricing is used for complex procedures or hospital stays to treat more serious illnesses. DRGs group patients with similar diagnoses, procedures, and lengths of stay to determine payments to a hospital. It is used by many other health insurers, Medicare and New Jersey’s Medicaid program to pay a predetermined, fixed payment for an inpatient stay, rather than paying for each individual service provided during the stay.
An example of DRG pricing:
A patient is admitted to a hospital with pneumonia. Under fee-for-service pricing, the hospital bills the insurer separately for every day the patient spends in the hospital and every individual treatment or service provided to a patient during the stay.
The experts who created DRG pricing believed this can give a hospital the incentive to provide more care, rather than better care.
Under a DRG pricing contract, instead of paying each of those individual charges separately, the hospital and insurer have negotiated a single, fixed amount to treat pneumonia that covers all of the costs – x-rays, respiratory therapy, prescription drugs, evaluations by doctors, inpatient days and everything else that patient needs to get well enough to be discharged.
This approach gives the hospital an incentive to deliver effective care efficiently without unnecessary treatments or extra nights spent in a hospital.
When a patient responds more quickly and can be discharged sooner than normally occurs, the predetermined DRG payment can be higher than the total of all the individual charges. But, if the hospital takes longer, uses more treatments or provides more services than it normally takes to treat pneumonia, the DRG amount will be lower than the total of all those charges.
DRG pricing is a common approach used throughout the country to control costs, drive quality outcomes and a encourage a better experience for patients. When the individual savings for every patient and every condition covered under a DRG pricing contract are totaled up, DRG pricing has been shown to lower the total cost of a care as compared to fee-for-service pricing.
DRG Pricing Explained
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What is this settlement about?
This settlement is about a contract dispute dating back to 2021. It centered on how a small number of claims should have been paid by Horizon on behalf of the State Health Benefits Program (SHBP) and School Employees’ Health Benefits Program (SEHBP). As part of the settlement, Horizon will pay the State $100 million, $93 million of which covers the claims payments in dispute that we had been seeking to resolve and accruing monies for, over the past four years.
To put this settlement in context, during the four-and-a-half-year term of the 2020 contract, Horizon processed more than 48 million claims for the State and $20 billion in related payments to providers. This settlement involves 0.07% of the claims and 0.46% of the total amount paid to providers (the vast majority of whom were large hospital systems).
Did Horizon do something wrong?
No. Horizon did not do anything wrong. We tried to resolve this dispute more than four years ago through a negotiated reimbursement, and made significant financial offers to address the disputed claims.
While the State’s interpretation of one aspect of the contract differed from Horizon’s, the settlement makes it clear that Horizon never retained any portion of monies charged to the SHBP/SEHBP for health care provider claims. Horizon paid claims we processed for the SHBP/SEHBP according to the contracts in place with doctors and hospitals.
That is why it is especially disappointing for the outgoing Attorney General to maliciously create false and dangerous accusations against Horizon that mischaracterize and distort facts to suggest wrongdoing by Horizon, where none exists.
What are the terms of settlement?
Horizon has agreed to pay $100 million to address the small number of disputed claims that were paid over a four-year period. We entered this agreement to resolve the disputed claims in the spirit of good faith and partnership that has defined our relationship with the State.
Of the $100 million settlement, $93 million covers the difference in claims payments that were in dispute and that Horizon has been seeking to resolve for more than four years.
Will this settlement result in my health care costs going up? Is this why my premiums have gone up so much?
No. It did not contribute to increased premiums or health care costs for any of Horizon’s members.
Will this settlement affect Horizon’s relationship with the State? Will Horizon still be my health plan?
We remain dedicated to providing SHBP and SEHBP members with access to quality, affordable health care. In 2024, the State once again awarded Horizon a contract to continue administering SHBP and SEHBP benefits, preserving our 60-year-long, mutually beneficial relationship.
Your Questions Answered
Products are provided by Horizon Blue Cross Blue Shield of New Jersey; Horizon Insurance Company; Horizon Healthcare of New Jersey, Inc.; Horizon Healthcare Dental; Horizon Casualty Services, Inc.; Horizon NJ Health; and/or Braven Health. Each company is an independent licensee of the Blue Cross Blue Shield Association. Communications may be issued by Horizon Blue Cross Blue Shield of New Jersey in its capacity as administrator of programs and provider relations for all its affiliates. The Blue Cross® and Blue Shield® names and symbols are registered marks of the Blue Cross Blue Shield Association. The Horizon® name and symbols are registered marks of Horizon Blue Cross Blue Shield of New Jersey. The Braven HealthSM name and symbols are service marks of Braven Health. © 2025 Horizon Blue Cross Blue Shield of New Jersey and Braven Health. Three Penn Plaza East, Newark, New Jersey 07105. ECN0025673 (1125)
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