A continuing legislative battle over whether and how limits should be placed on payments to doctors and hospitals outside of patients’ insurance networks could lead to greater transparency in the form of a state Healthcare Price Index, according to the most recent revisions of a proposed bill.
Interestingly, the price index – which sponsors insist must be part of the legislation – is opposed by both healthcare provider and insurers, albeit for different reasons.
The legislation, which aims to prevent surprise bills for emergency and involuntary treatments outside of patients’ insurance networks could undergo more changes as legislators steer it toward an end-of-June finish line.
Legislators have already dropped a proposal to limit payments to between 75 percent and 250 percent of the median in-network commercial insurance payment.
That change was made in response to healthcare providers’ feedback to the bill, A-444/S-20, the Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act.
But the measure would still require insurers and healthcare providers to enter into binding arbitration to settle disputes over out-of-network bills — a provision that sought by insurers and consumer groups but fiercely opposed by providers, who say that it would establish a system biased in favor of payers.
And it would still require creation of the Healthcare Price Index – which would list median prices paid by insurers for all in-network healthcare services in the state.
In addition, healthcare providers would still be required to inform consumers of the potential charges that they face.
Bill sponsor Craig J. Coughlin (D-Middlesex) said he’s hopeful that the bill will draw bipartisan support and pass this month, although he said he’s unwilling to commit to a timeframe.
Coughlin said he thinks the bill balances all competing interests – and, “first and foremost,” is in consumers’ interest.
Wardell Sanders, president of the New Jersey Association of Health Plans, an insurance industry trade group, said binding arbitration is needed because state law imposes no limits on what out-of-network providers can charge for their services.
“Ideally, you force people to the table and you force them to be more reasonable in their position,” Sanders said.
State law currently protects patients in individual and small-group insurance plans from being charged directly for high out-of-network bills, but insurers, employers and consumer advocates say those high charges still lead to higher insurance premiums and increased costs to government.
In addition, consumers can be hit with surprise bills if they are in insurance plans that larger employers fund directly, since these self-funded plans aren’t regulated by state law (they’re regulated by the U.S. Department of Labor). These plans include the health plans covering public employees.
“The current system is a blank check for folks that want to take advantage of it, and it’s not right,” Sanders said.
The latest revisions to the bill also include a provision, drawn from New York State, requiring providers to provide patients with information on estimated payments, details about planned medical procedures, and guidance on where to get additional information.
Some hospital executives argue that what insurers describe as “price gouging” is a necessary business model for hospitals that could close if they were forced to accept insurers’ “low-ball” in-network payment offers.
But Mishael Azam, chief operating officer of the Medical Society of New Jersey, rejected the idea that there are no limits on what out-of-network providers are paid.
She noted that payers can take providers to court if they can’t agree on a bill. In addition, the Medical Society – the state’s largest doctors’ group – offers a nonbinding arbitration process in which self-funded plans can appeal a provider bill and have it reviewed by a doctor who isn’t affiliated with the provider. And the state also offers an arbitration process to settle individual and small-group billing disputes.
“The wheel doesn’t have to be reinvented,” Azam said, saying the legislation could build on existing processes.
She added that the Medical Society supports the bill sponsors’ decision to drop the limits on out-of-network charges.
As for the Healthcare Price Index, Sanders said establishing it would cost an estimated $1 million, while Azam contended that it would be incomplete, since self-funded plans’ participation would be voluntary.
But the bill’s sponsor, Assemblyman Troy Singleton (D-Burlington), saidsaid other states have successfully implemented similar sources of price information, which are known as all-payer claims databases. These databases gather information about all medical claims, which researchers and healthcare-quality advocates also see as a source of information for learning more about insurers, providers and services.
Singleton proposed launching such a database two years ago, when the federal government would have paid the startup costs under the Affordable Care Act. But Gov. Chris Christie’s administration opposed the idea and the bill wasn’t enacted. The index would now be funded by a fee on insurers.
“We can fix this system if everyone is willing to invest into an outcome, and it’s not an outcome that favors one interest or another, it’s an outcome that puts consumers first,” Singleton said.
A key sticking point is settling on details of the arbitration system proposed in the bill.
Bill supporters say that Illinois enacted a similar binding arbitration system, which has led to healthcare providers negotiating lower reimbursements with insurers.
But advocates for doctors said it would put them at an unfair disadvantage. For example, they say , insurers wouldn’t have an incentive to offer doctors fair rates if they knew that they could win in arbitration.
However, Coughlin noted that healthcare providers would be able to argue during arbitration that if, for example, a medical case was particularly complex or if the doctor was especially experienced, that he or she deserves to be paid more.
Representatives for doctors also said that insurers are intentionally limiting the size of their networks to drive down costs for individual insurance plans due to the Affordable Care Act.
New Jersey Hospital Association President and CEO Betsy Ryan expressed concern about a provision of the bill that would require hospitals to inform patients about all of the costs that they could face. She noted that the ACA already requires insurers to provide information on consumer prices, that hospitals don’t always have access to doctors’ billing information, and that many factors can later affect the cost of a service.
“I think we have to hold the plans’ feet to the fire” to build larger networks by paying providers more, Ryan said. She said the goals of the bill are “noble” and that hospitals want to be part of the solution.
Assemblywoman Caroline Casagrande (R-Monmouth) said any arbitration process should also consider whether the insurer has maintained a small network of providers for the service whose price is being disputed.
A series of medical specialists opposed the bill during a legislative hearing yesterday. Dr. Mitchell Reiter, an orthopedic surgeon, said that insurers often seek to pay providers less by promising there will be more patients, but he said doctors “can’t volume-discount for spinal or orthopedic surgery.”
Consumer groups, including New Jersey Citizen Action and AARP, back the measure. They cite the greater price transparency, stronger disclosure requirements, and the potential for lowering health costs and preventing surprise bills.
Raymond J. Castro, senior policy analyst for New Jersey Policy Perspective, said the bill would help consumers facing both high premiums and out-of-pocket costs.
“The Affordable Care Act has helped to bring premium costs down for very low-income New Jerseyans, thanks to the Medicaid expansion and the subsidies that are provided in the exchange. However, cost-sharing in the exchange still hits moderate-income New Jerseyans with very high expenses,” Castro said in testimony he submitted to the Assembly committee.
The Assembly Financial Institutions and Insurance Committee held a hearing on the bill but didn’t vote on it yesterday – the committee’s next scheduled meeting is June 15. The Senate Commerce Committee is scheduled to hear the bill on Monday.