TIME TO PROTECT CONSUMERS FROM SURPRISE MEDICAL BILLS

For almost 10 years now, New Jersey lawmakers have been grappling with the issue of what to do about surprise medical bills.

They are the invoices sent by doctors and other health care providers who are not part of your insurance company’s network. So when your insurance does not cover the full amount of what they charge for their services, they come after you to pay the difference. Hence the term “balance billing.”

These bills are a huge problem. New Jersey Policy Perspective estimates that 168,000 state residents per year receive such bills, totaling about $420 million. The cost is even greater than that, nearly $1 billion annually, when you factor in the increased cost of health insurance premiums, which are driven up by the out-of-network charges.

So it was a positive development earlier this month when the Assembly Financial Institutions and Insurance Committee voted 9-3 to advance A-2039, the latest legislative effort to address the problem.

It is a little less encouraging, however, when you realize that similar bills have been introduced for years now and have have twice before been approved by that same committee but not once passed by either House. In fact, the same day as the vote on A-2039, the Senate Commerce Committee canceled a hearing on the companion bill, S-485. Apparently, there were not enough votes. Lack of a Senate committee vote has proved  the same roadblock in prior legislative sessions.

Health-care advocates and the bill’s chief sponsors, Assemblymen Craig Coughlin (now Assembly Speaker) and Gary Schaer, along with Senators Joseph Vitale and Loretta Weinberg, seem determined to get it through this time. During the multiple days of hearing on the bill, Schaer especially sounded frustrated that consumers have gone so many years without relief from such a serious and widely recognized problem.

The name of the legislation, The Out of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act, reflects its comprehensive scope.

Patients would remain free to go out of network if they are willing to pay more for a special doctor or hospital. But the law would protect them when, through no choice of their own and having endeavored to stay within their insurer’s network, they are socked with surprise medical bills either due to an emergency situation or through inadvertent use of out-of-network services.

For example, someone who has a colonoscopy done by an in-network doctor at an in-network hospital might still end up getting a bill from an out of network anesthesiologist who they had no idea would be involved in the procedure. Or the surprise bill might be incurred in the course of in-network care for related testing, such as an MRI.

In those situations, the legislation holds patients harmless and prevents them from having to pay any more than they would for an in-network anesthesiologist or MRI.

Much of the bill focuses on transparency and disclosure in order to minimize inadvertent out-of-network charges when patients seek non-emergent, elective care.

Providers would have to disclose up-front whether they are in the network of the patient’s insurer. Out-of-network doctors would have to inform the patient of their right, on request, to obtain an estimate of how much their services would cost.

Health care facilities, such as hospitals, would be required to make public the health benefit plans in which they participate and their standard charges for items and services. They would also have to state on their websites that physician services are not included in their charges and that the physicians who provide care at the facility are not necessarily in the same networks and patients should check with their physicians and carriers about coverage. Contact information for doctors working at the facility, including the plans they are part of,  as well as for doctor groups providing services under contact, would also have to be posted.

Insurance carriers would be obligated to provide clear information about in-network versus out-of-network benefits both online and through a hotline that would operate at least 16 hours per day. They would also have to update their websites within 20 days with any changes in a health provider’s network status.

After obtaining the required disclosure about network status and out of network costs, patients would be shielded from extra out-of-pocket costs unless they “knowingly, voluntarily, and specifically selected an out-of-network provider” under circumstances in which they had an in-network option. Otherwise, balance billing is banned.

So far so good. No one is objecting to those aspects of the bill, which has broad support from healthcare advocates, unions, health insurers and business interests. NJ Appleseed, as a member of the NJ for Healthcare Coalition, has been a long-time backer.

The opposition is coming from doctors and hospitals over the dispute resolution provisions, which set up a process for deciding how much insurance companies must pay doctors for out-of-network care when the patient is off the hook because they did not agree to the extra expense.

A-2039/S-485 would utilize what is known as “baseball arbitration” if negotiation fails to resolve the question and the amount at stake is at least $1,000. Arbitrators would be required to choose between the provider’s or the carrier’s final offer. They could not split the difference or opt for some in-between amount.

In deciding which number to choose, they would have to consider multiple factors, which are spelled out. Those factors include the doctor’s training, education and experience; the complexity of the case; individual patient characteristics; and the amount paid by the carrier to other out-of-network providers for comparable services.

They would also be required to take into consideration the average in-network amount paid by that carrier as well as the provider’s usual charge for comparable services provided both in and out of network with respect to any health benefits plans, which would include Medicare and Medicare.

One health industry hearing witness called the latter provision a “poison pill” because it brings the low-Medicare and Medicaid rates into the arbitrators’ decision-making process.

There was testimony warning that it would hurt not just providers but patients because it would deter specialists such as neurosurgeons from providing all-hours care at non-hub hospitals and the ensuing delays in treatment resulting from having to transport critical patients to the larger hospitals could mean the difference between life and death.

And providers complain in general that the legislation favors insurance companies, putting all the blame on doctors for high medical bills without taking a look at the role of the carriers.  They also assert they will be disadvantaged in negotiating in-network rates with insurers because of the low rates that will result from the arbitration and that the bill allows insurers to withhold payment for so long that it will affect cash flow and interfere with the operation of hospitals.

They would like arbitrators to rely on a different benchmark, from FAIR Health, a New York nonprofit, whose data are based on market rates and used by New York and Connecticut for their out-of-network arbitration. The committee members heard testimony from the Deputy General Counsel for Fair Health.

Nevertheless, they advanced the bill.  It was pointed out that changes had already been made to address the concerns of the medical community, including removal of a provision that would have restricted arbitration decisions to a range of 90% to 200% of what Medicare would pay for the same service.

One major shortcoming of the bill is that it will apply only to state-regulated  health insurance plans and not to the approximately 70 percent of group health plans in New Jersey that are self-funded and thus fall under the Employee Retirement Income Security Act, or ERISA, a federal law.

New Jersey has no power to regulate those plans. The bill, however, allows them to opt in to the law.

The state plans that will be governed by it include the State Health Benefits Program, the School Employees Health Benefits Program and local government employee benefits programs. Because of the potential cost savings, the Pension and Health Benefits Review Commission recommended enactment of the Out-of-Network law in 2015.