Out-of-network legislation clears Assembly committee

The New Jersey state Assembly bills to address surprise out-of-network hospital bills are one step closer to becoming law, despite some remaining concerns for both payers and providers.

The two bills, sponsored by Assembly Democrats Craig Coughlin (D-Woodbridge), Gary S. Schaer (D-Passaic), Troy Singleton (D-Mount Laurel), Pamela Lampitt (D-Voorhees) and Grace Spencer (D-Newark), cleared the Financial Institutions and Insurance Committee on Monday.

Originally introduced earlier this year as a single bill, the two new pieces of legislation cover changes in the administrative process for hospitals during non-emergency procedures, as well as creating a new transparency tool to determine what providers are charging for care — known as the Health Price Index. If enacted, the out-of-network bill would rely on the state Department of Banking and Insurance to find an organization to collect and maintain the Health Price Index.

The out-of-network bill, which is similar to a bill making its way through the Senate, is raising concerns about the increased burden on health care professionals, while the creation of a new price tool is likely to increase the already too-high-cost of insurance plans.

The New Jersey Business and Industry Association supported the out-of-network bill, but has some concerns about the HPI.

“NJBIA continues to oppose creation of an HPI,” testified Mary Beaumont, vice president for health and legal affairs.  “Surcharges on health insurers and benefits plans will ultimately increase health care costs for New Jersey employers. Furthermore, it’s duplicative. Existing sources collect and provide in-network and out-of-network cost information from physicians, hospitals, health care facilities and insurers.”

Similar opposition can also be seen for the administrative burden on doctors from the out-of-network bill.

But the bills’ sponsor believes the physicians and health care professionals within the health system should be responsible for tracking the insurance information. Laws already exist for emergency situations to be treated as in-network, so elective procedures are typically where surprise bills appear.

“If they were given the choice between continuing with medical care that ultimately would lead to substantial out-of-pocket costs and considering other options that carry a lower price tag, the vast majority of reasonable New Jersey residents certainly would choose the latter. The problem, at present, is that they don’t have that choice,” said Schaer.

Sen. Joseph Vitale, who heads the health committee and reviewed a similar bill, applauded the Assembly bill.

“Along with my Assembly counterparts sponsoring the bill, I am now confident that we have a piece of legislation that will advance through both houses before the end of this legislative session,” Vitale (D-Woodbridge) said in a statement. “People are being forced to choose between paying off medical bills that they never expected to receive or paying their necessary everyday expenses like rent, mortgage and food. It’s not a fair choice to have to make. New Jersey consumers need to know what they’re getting into, before non-emergent out-of-network medical services are provided, so they can make informed choices rather than being arm-wrestled into damaging debt.”

The bills call for the following to be implemented by health care facilities:

  • Disclose whether the facility is in- or out-of-network.
  • Advise the patient to check with the doctor arranging the services to determine whether or not the doctor is in- or out-of-network.
  • Advise the patient if a change in network status has occurred between the time the appointment was made and the time of the procedure.
  • Advise that the patient contact his or her insurance carrier for further consultation regarding costs.
  • Make publicly available a list of standard charges for the items and services it provides
  • Follow a binding arbitration process to allow consumers a chance to fight surprise bills
  • Publish online the names, mailing addresses and telephone numbers of physicians working at the facility and hospital-based physician groups with which it has contracted to provide services, including anesthesiology, pathology and radiology.

The New Jersey Association of Health Plans released a statement supporting various aspects of the bill, but stated concerns with the peer review process, cost sharing for emergency services and the $1,000 threshold for arbitration — all of which were urged by hospitals and health care providers.

“We believe that the peer review process will add cost and prove to be of limited utility, as it is not likely to provide information not already available to the disputing parties.  We are also concerned about our experience with peer-review process, as we have seen that providers are reluctant to challenge their peers.  As a result, we do not support the proposal,” NJAHP said in the statement.

“While we continue to have concerns about a number of elements of the bill, especially the network audit section, which we see as redundant of existing regulatory requirements, overall, we are supportive of the bill.  Consumers, labor organizations, businesses, the State Health Benefits Program and other payers will benefit from the bill’s transparency measures and cost containment measures. It is time to put a stop to surprise bills for consumers and reign in the predatory price gouging practices by certain provider.”

Martin J. Milita, Jr. Esq., is senior director at Duane Morris Government Strategies, LLC.

Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services. The firm offers a range of government relations and public affairs services, including lobbying, grant writing; development finance consulting, media relations management, grassroots campaigning and community outreach. Milita works at the firm’s Trenton and Newark New Jersey offices.

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NJ Out-of-Network Consumer Protection Act

The “Out-of-Network Consumer Protection, Transparency, Cost Containment, and Accountability Act.” [(Senator Joseph Vitale (D-19), Assemblyman Gary Schaer (D-36), Assemblyman Troy Singleton (D-7), and Assemblyman Graig Coughlin (D-19)] would implement sweeping legislation to reform various aspects of the New Jersey health care delivery system by: increasing transparency in pricing for health care services; enhancing consumer protections; creating an arbitration system to resolve certain health billing disputes; containing rising costs associated with out-of-network healthcare services; and, measuring success accordingly.

The  legislation would enhance employee rights and protections as patients and save an estimated $1.0 billion according to the sponsors. Others, including the New Jersey Association of Counties, (NJAC) are concerned that the measure may initially increase the costs of health benefits plans as the bill would impose an annual surcharge on all plans to fund operation and administrative expenses of a Healthcare Price Index (HPI). In summary, the HPI would: identify and electronically publish the list of median in-network paid commercial claims for the payment range as established under the bill; and, make healthcare data available to the State to improve healthcare quality, reduce healthcare costs, and increase pricing transparency.  Although in general it appears that the bill does directly apply to counties enrolled in the State Health Benefits Plan (Atlantic, Camden, Gloucester, Hudson, Mercer, Ocean, Salem, Sussex, and Warren), the annual surcharge imposed by the legislation would in fact impact all health benefit plans and counties.

Hence several recommendations have been put forth:  1) use an existing federal database on medical care to eliminate the need for a New Jersey specific HPI and corresponding surcharge; or, 2) establish  a New Jersey specific HPI as called for under the bill, but eliminate the surcharge, allocate a one-time State appropriation to establish the Health Price Index Fund, and dedicate monies collected from violations of the Act to the Fund for operation and administrative expenses.  NJAC is further seeking a clarification on whether the surcharge would impact health benefit plan expenses under the looming “Cadillac Tax” for high-cost employer-sponsored health benefits coverage set to begin 2018 at $10,200 for individual coverage and $27,500.000 for all other coverage tiers.