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Plan to Prevent Unexpected Medical Bills Stalls, But Backers Still Hopeful

Lawmakers want info on impact on small urban hospitals and state budget, while head of state’s biggest insurer says issue must be high priority

Bob Marino
Bob Marino, chairman, president and CEO of Horizon Blue Cross Blue Shield of New Jersey.

When the bill intended to limit unexpected high medical bills was pulled before a vote by the Senate Commerce Committee on June 8, observers may have been forgiven if they had a sense of déjà vu.

In recent years, bills with similar provisions – one that would have prevented patients from being surprised by bills from providers outside their insurance networks and another that would have established arbitration as a way of resolving payment disputes -- had been introduced amid fanfare, only to stall out.

But supporters of the Out of Network Consumer Protection, Transparency, Cost Containment, and Accountability Act, S-20/A-4444, say that this time will different, as they plan to work through the summer and into the fall to ensure that the issue is addressed by lawmakers this year.

“I’m happy to work with them over the summer,” the bill’s sponsor, Assemblyman Craig Coughlin (D-Middlesex), said of various healthcare stakeholders. “I didn’t have any summer reading set aside for myself, so we’ll work on this.”

Sponsors remain hopeful that all of the major pieces of the bill will remain a part of the legislation. These include requiring arbitration to resolve payment disputes between out-of-network providers and payers; building a statewide database of healthcare payments that can be used in determining arbitration awards; requiring providers to disclose to consumers the costs they face before a procedure; and barring providers from waiving copayments as a way to attract out-of-network patients.

The bill seemed to be moving along for a potential vote this month before it was halted in the Senate Commerce Committee, after committee members said they had concerns that were unlikely to be resolved as legislators’ attention focused on the state budget.

Supporters argue that the bill is primarily a way to protect consumers, both by preventing them from being directly hit by high costs for emergency or inadvertent out-of-network services and from being indirectly affected by charges that raise costs for insurers and employers.

Doctors met this argument with fierce resistance. They argued that the ability to go out-of-network provided needed leverage in negotiations that would otherwise lead to inadequate payments. Hospital officials also cautioned that the bill was advancing too quickly and could drive some hospitals out of business.

Several challenges to passing the bill remain, chief among them the simple fact that legislators don’t want to see hospitals in their district close. And the chain most forcefully making argument that the bill could lead to closures is CarePoint Health, the for-profit, Hudson County-based network -- . influential legislators, including Assembly Speaker Vincent Prieto (D-Bergen and Hudson), represent that county.

But bill advocates, including the head of state’s largest insurer, say the issue is too important to leave unresolved.

Sen. Raymond J. Lesniak (D-Union), a Commerce Committee member, said he didn’t have enough information to support the bill at the hearing.

“I know legislators and people had been working on it for a long time, but this was the first time the committee heard the bill,” he said yesterday.

Lesniak said he was looking for more information on the bill’s potential impact on small urban hospitals, as well as how much the state would save in healthcare spending. He said he wants a solution that protects consumers and lowers healthcare costs, but without any unintended consequences.

“Unfortunately, the case wasn’t made sufficiently enough for the committee members to make a decision, but obviously we know a problem has been identified,” Lesniak said, adding, “I expect we will have a reform bill that will get released, passed, and signed into law” this year.

Horizon Blue Cross Blue Shield of New Jersey Chairman, President and CEO Bob Marino has been a persistent voice in favor of legislative action, and he’s not letting up.

“It’s important to Horizon, but more importantly it’s a consumer issue and it’s a cost-of-healthcare issue,” Marino said, adding that out-of-network costs contribute to New Jersey having some of the highest healthcare costs in the country.

Marino said that New Jersey, in effect requires insurers to cover the difference between commercially insured patients’ normal in-network costs and the amount charged by out-of-network providers. This allows a few providers and hospitals to engage in “price gouging,” he said.

“This is very similar to what happened during Hurricane Sandy,” when some gas stations raised their prices until they were stopped by the state, Marino said.

In response to the argument by doctors and hospitals that Horizon and other insurers are offering rates that are too low for them to remain open or in practice, Marino noted that roughly 80 percent of practicing doctors and 61 of 64 hospitals are part of networks. The exceptions are Bergen Regional Medical Center in Paramus, CarePoint Christ Hospital in Jersey City, and Palisades Medical Center in North Bergen.

Some have pointed out that as the dominant insurer in the state – covering 3.7 million residents – it can difficult for healthcare providers to remain outside Horizon’s network.

Marino said the simplest solution to high costs would be for the state to limit the amount that providers can receive for a service to a certain percentage above what Medicare pays.

“Candidly, while we recognize that a cap would be the cleanest and simplest approach, we’re open to other alternatives,” Marino said, adding that the arbitration process in the bill could be “workable.”

Marino said legislators are becoming increasingly aware of how surprise hospital bills hurt consumers.

“In my sense, this issue has been kicking around the Legislature for several years, but this year is very different,” due to the focus on consumers, he said.

Coughlin said of the bill: “This is something that has to happen.”

And while he’s interested in gathering estimates of cost savings, he said the ultimately case for the bill will rest on the importance of being fair to consumers.

Senate sponsor Joseph F. Vitale (D-Middlesex) said he understood the importance of providing more information to Lesniak and other legislators about what the bill seeks to accomplish and why it was written the way it was.

Assemblyman Troy Singleton (D-Burlington), another sponsor, said that while he was disappointed that the bill didn’t advance, the need to provide more information to other legislators “underscores the enormity of the problem and the complexity of the issue – we as sponsors have to do a better job” of explaining the bill.

Singleton added that the bill would have provided millions of dollars in needed savings in the state budget if it had been passed this month.

Neil Eicher, the top lobbyist for the New Jersey Hospital Association, said the association looks forward to working over the summer to come up with some solutions to offer the bill sponsors. He acknowledged that surprise medical bills are a problem, and that hospitals, doctors, and insurers all play a role in it.

And Mishael Azam, chief operating officer for the Medical Society of New Jersey, said the doctors group opposed the current version of the bill. But she also said that she wants to work with the sponsors over the summer.

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