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Legislation to Limit Surprise Medical Bills Goes Forward Without Price Index

Sponsors make cut, hoping to give measure better chance of passing lame-duck session, craft second bill for index

out-of-network sponsors
From left: Assemblymen Craig Coughlin (D-Middlesex) and Troy Singleton (D-Burlington), Sen. Joseph F. Vitale (D-Middlesex) and Assemblyman Gary S. Schaer (D-Bergen and Passaic).

New Jersey lawmakers aiming to pass sweeping legislation that would prevent patients from being hit with surprise medical bills have done some surgery of their own, cutting out a major provision that would have added a layer of transparency to healthcare prices.

Assemblyman Craig J. Coughlin (D-Middlesex) and other sponsors of the original bill, which would have regulated out-of-network costs, if it included the healthcare-pricing component.

“While (the price index) is important -- and we think it’s important that we have a reliable source of data that will pay benefits for decades to come -- the calculation was that it was an impediment to getting the bill across the goal line,” Coughlin said.

So the sponsors crafted two measures.

The Out-of-Network Consumer Protection, Transparency, Cost Containment, and Accountability Act (A-4444/S-20) is meant to ensure that patients are informed about out-of-pocket costs before they schedule a service. It would also establish binding arbitration to resolve disputes between doctors and hospitals and insurers and patients.

Coughlin and fellow sponsors Assemblymen Gary S. Schaer (D-Bergen and Passaic) and Troy Singleton (D-Burlington) and Sen. Joseph F. Vitale (D-Middlesex) argue that the bill would keep providers from pushing prices too high. Consumer advocates, who say that high medical bills inflate health insurance premiums, have largely supported the measure.

The Healthcare Price Index, now contained in a separate bill (HPI), would let consumers and researchers learn the average prices for healthcare services delivered inside patients’ insurance networks.

Healthcare providers have criticized the bill for being too favorable to insurers and leaving them with less power to negotiate fair reimbursement rates.

Along with removing the price index, legislators made several other significant changes to the bill. First, they made it optional for self-funded health plans to participate in the new system set up by the bill. Second, they agreed that billing disputes could receive a peer review by independent medical experts before going to arbitration. Finally, they barred patients from being required to pay more for emergency services than the least-expensive service in their insurance network.

Coughlin said the changes were made partially in response to concerns raised by stakeholders, as well as to make it more likely to be passed by the end of the legislative session in January.

The U.S. Department of Labor and not the state primarily regulates self-funded plans, which include those offered by large employers and building-trade unions. Coughlin said the sponsors were concerned that if arbitration weren’t voluntary, self-funded plans cwould file a legal challenge after the bill became law. Patients covered by self-funded plans would still be able to pursue arbitration individually under the changes to the bill.

The state’s largest doctors group renewed its criticism of the bill yesterday. Medical Society of New Jersey Chief Operating Officer Mishael Azam said the largest concern with healthcare pricing is the concentrated power of insurers, as demonstrated by Horizon Blue Cross Blue Shield of New Jersey’s OMNIA.

These plans allow patients to pay less out-of-pocket if they visit hospitals and doctors designated “Tier 1.” Providers who were left out of that tier have denounced the plans.

“Especially now with OMNIA, we see that carriers do not meet network adequacy requirements and offer unfair contracts to physicians, poor payment and poor terms,” Azam said in a statement. “We need to address those in-network problems rather than vilifying the small number of doctors who are out-of-network because of the offensive behavior of carriers.”

The changes to the bill did include a direct response to concerns about tiered health plans, the provision that limits emergency-room bills to the lowest price inside a patient’s insurance network. A patient with a tiered health plan wouldn’t be required to pay more for emergency services at a Tier 2 hospital than they would for a Tier 1 hospital.

During an October hearing on OMNIA, Vitale expressed concern that a patient suffering a stroke or similar catastrophic event wouldn’t be in a position to make choices about where they received treatment, and shouldn’t have to pay more to go to a Tier 2 facility. Coughlin agreed, saying that being in an ER “is not a time when you’re going to be thinking about a deductible or copay … that’s why I’m so proud of this bill.”

“We tried to keep (the bill) as faithful as we could to the notion that this is a consumers’ bill and I think that we did that overwhelmingly,” Coughlin said.

Executives with the New Jersey Hospital Association -- which has joined the medical society in opposing the bill -- were reviewing the changes shortly after they were announced yesterday.

NJHA Vice President of Government Relations and Policy Neil Eicher acknowledged that some of the changes appeared to be positive. “The removal of the Healthcare Price Index is something that we’re supportive of,” Eicher said, before adding that the association would look at the index “with fresh eyes” now that it’s in a separate bill.

“There are still overall general concerns about a hospital retaining its ability to negotiate adequate in-network rates with carriers,” Eicher said. “ However, we’re still committed to reaching to resolution that will protect patients from surprise medical bills.”

New Jersey Association of Health Plans President Wardell Sanders also said his members were reviewing the changes yesterday.

Another change to the bill would drop a requirement that providers inform patients of potential out-of-pocket costs 30 days before delivering a service, although they would still have to give this information before scheduling a service. And the arbitration process would now be limited to reimbursements of at least $1,000; the original bill didn’t include a minimum level for arbitration.

Coughlin said he’s confident that the Assembly would pass the revised bill on Monday, and is hopeful that the Senate would also pass it and that Gov. Chris Christie would sign it. If enacted, the bill’s provisions would go into effect on July 1, 2016.

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