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Christie Bases Budget Savings on Passage of Complex Health Insurance Laws

The governor wants to trim surprise medical bills, and is betting $125M in budgeted healthcare savings that legislators, insurers, providers can get the job done

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Gov. Chris Christie has added his voice to a growing chorus of concern over the impact of costly medical procedures performed at healthcare facilities that are not part of patients’ insurance networks, an issue that New Jersey officials have been wrestling with for eight years.

The Republican governor highlighted the need for out-of-network billing reform in his annual budget speech Tuesday and called on the state Legislature to take action soon to address the problem, an issue advocates have said impacts tens of thousands of New Jersey patients directly and has driven up the cost of care for everyone.

As if to underscore the point, Christie included $125 million in healthcare savings as a result of this potential reform in his proposed $35.5 billion state budget for fiscal year 2018, which must be approved by lawmakers before it can take effect in July. According to the plan, taxpayers could expect to save that much on healthcare costs for all government workers insured by the state after a reform is enacted.

The proposal echoed the governor’s approach last year, when he called on members of a special committee that crafts healthcare plans for public workers to come up with $250 million in savings — and included that figure in his budget proposal. When cuts of this magnitude didn’t materialize by the time he signed the budget into law, in June, Christie issued a separate order threatening to reduce by $250 million funding for distressed cities and other legislative priorities instead.

Reducing out-of-network expenses a priority

Christie is not the only one eager to reduce out-of-network expenses. The issue has been a priority for advocates at Citizen Action and their colleagues in the New Jersey for Healthcare Coalition, as well as the insurance industry, hospital leaders, and others. All parties generally agree that patients must be armed with better information about their insurance networks and what providers are included — and protected from additional costs in emergencies. But consensus is lacking on whether legislation should also control healthcare prices and, if so, how to do so.

(While New Jersey law protects patients from being charged for emergency treatment at out-of-network facilities, the higher price tag associated with these procedures adds to the cost for insurance companies and businesses or individuals that pay for the coverage. Advocates have said these expenses add at least $1 billion to New Jersey premium costs each year.)

Others also connected the need to address this issue with the state budget. Insurance officials, including leaders at Horizon Blue Cross Blue Shield — which Christie called on in his speech to voluntarily contribute to an annual fund to help cover the cost of addiction treatment and other healthcare expenses for poor patients who lack insurance — said resolving the out-of-network debate must be a priority for all state officials.

“Instead of taking our members’ reserves, we should partner to create a permanent and stable source of revenue to help New Jersey’s less fortunate by tackling, once and for all, the $1 billion dollar out-of-network billing abuse and surprise medical billing problem,” Horizon spokesman Kevin McArdle said Tuesday.

Surprise billing needs to be dealt with

Betsy Ryan, president and CEO of the New Jersey Hospital Association, which represents hundreds of hospitals and other healthcare facilities, said the organization is also eager to resolve the surprise billing issue. “NJHA and its members are on record supporting several patient protections, including a greater call for transparency,” she said. “We look forward to learning more about his proposal and being part of that conversation to pass an out-of-network bill that is fair to both healthcare providers and payers, but most importantly, to patients."

In his budget remarks, Christie didn’t endorse a specific approach but made clear his preference for the less controversial element of reform: improving transparency and patient protections. “In anticipation of the Legislature enacting meaningful out-of-network reform, I am recognizing budget savings for a reasonable transparency solution to out-of-network surprise billing that will allow employees to be in a position to choose for themselves whether they wish to pay higher rates to go out of network,” Christie said. “It’s a small first step in the right direction and it’s hard to argue the benefits of transparency. “

The State Health Benefits Plan, which covers nearly 800,000 state, county, local, and school workers, spent more than $3.8 billion on employee healthcare costs in 2015 — and claims may still be accruing. That included nearly $900 million in out-of-network bills — although some of these expenses may reflect patient choice, not true “surprise” bills for charges that were not clear in advance.

Enforce out-of-network ‘fair pricing’

Sen. Joseph Vitale (D-Middlesex), the longtime chairman of the health committee, with Assemblyman Craig Coughlin (D-Middlesex), has led the Legislature’s charge on the issue with a hotly debated bill that would ensure transparency, protect patients, and control costs. “Transparency alone will not accrue any savings to the state,” Vitale said Thursday. “I’m hopeful that shortly we will have reached consensus with most of the stakeholders,” he added, suggesting the bill could see legislative action soon.

Ward Sanders, president and CEO of the New Jersey Association of Health Plans, which represents the state’s insurance companies, agreed. “Meaningful out-of-network reform incorporates not only transparency, but also ensures that there is fair pricing by hospitals and doctors in circumstances where consumers do not have a choice about their care. Pricing transparency is not meaningful to a person in an ambulance,” Sanders said. “We hope that this state budget protects taxpayers, public employees, and others by enforcing meaningful out-of-network reform with fair pricing.”

The measure (S-1285) was scheduled for a hearing in December, but got pulled from the agenda when it became clear some stakeholders still had concerns. The most contentious issue involves the process by which healthcare providers would resolve disputes with insurance companies; in the current version, the bill would set a range of 90 percent to 250 percent of the Medicare rates as parameters on these decisions. An Assembly version was adopted in October.

Other proposals focus more on transparency and patient protection. A bill (A-2988) sponsored by Assembly Budget chairman Gary Schaer (D-Bergen) and Tom Giblin (D-Essex), would require doctors and hospitals to spell out their associations with insurance companies and how that will impact a patients' bill. Insurance companies would be required to maintain up-to-date listings online and elsewhere of which providers are included in their plan networks. The measure has yet to have a hearing.

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