A measure intended to rein in the cost of out-of-network medical services has gone through a number of changes as it makes it way through the Legislature. And despite the fact that a key provision has been dropped, which would have eliminated surprise medical bills for many patients, consumer advocates say they still back the bill due to the provisions it has retained.
The legislation came under heavy fire in the Assembly earlier this year, when the largest trade groups representing doctors and hospitals criticized it for giving too much negotiating power to health insurers. They renewed that criticism at a hearing yesterday.
It’s a charge that’s rejected by both insurers and the bill’s sponsors, who describe the measure as primarily intended to help consumers. The sponsors have made changes, including dropping a healthcare price index that would allow patients and researchers to see the average prices for in-network services.. That index will be put forward in a separate bill.
Despite these changes, the bill continues to have the backing of consumer advocates, who say that it makes it possible for patients to determine whether providers are members of their networks and also protects them from extraordinarily high bills.
The Out-of-Network Consumer Protection, Transparency, Cost Containment, and Accountability Act (A-4444/S-20) was spurred by concerns that patients can be affected both directly by unexpected medical bills and indirectly by high bills paid by their insurers that lead to premium increases. While the discussions that led to the bill began in October 2014, it built on earlier legislation sponsored by Assemblyman Gary S. Schaer (D-Bergen and Passaic) that had been discussed since 2010.
The bill requires providers to notify patients whether they’re in the patients’ networks before scheduling a service and allows binding arbitration for cases in which providers and payers can’t agree on the price of out-of-network services that were provided in an emergency or involuntary situation.
“At the end I think we have a bill that consumers in the state of NJ should be happy about. It’s one that helps protect them,” said Assemblyman Craig J. Coughlin (D-Middlesex). “It addresses a real concern that they often deal with, something that most everyone we know deals with at some point of their life.”
He emphasized that the bill will directly lead to lower health costs, including to taxpayers who pay for public employees’ benefits. He noted that the Government Finance Officers Association of New Jersey estimated that it could save between $22 million and $98 million for the state.
Since Coughlin, Schaer, Assemblyman Troy Singleton (D-Burlington) and Sen. Joseph F. Vitale introduced the bill in May, they’ve made a series of changes to it. These include removing a section that would create a New Jersey Health Care Price Index, allowing consumers and researchers to learn the average price paid for in-network healthcare services. That index also advanced yesterday as a separate bill.
One of the more significant changes was in response to concerns that state law does not regulate the majority of private insurance plans. These self-insured plans, in which an employer pays for healthcare costs directly rather than through monthly premiums, are primarily regulated by the U.S. Department of Labor. The state Department of Banking and Insurance regulates fully insured private plans, including those offered by small employers and by the federally operated insurance marketplace.
While bill sponsors initially said they believed that the state had the authority to apply the provisions of the bill to the self-insured plans, they decided to make it voluntary for those plans to decide whether they want to be covered by the bill.
If an employer-provided, self-insured plan decides not to be covered by the legislation, the patients covered by that plan would still be able to appeal high bills individually, under a provision recently added to the bill.
Much of the strongest criticism of the bill has come from the Medical Society of New Jersey, the state’s largest doctors group.
“It is a false narrative to suggest that a small number of outlier, out-of-network physicians raise premiums,” society Chief Operating Officer Mishael Azam said, adding that bills from doctors’ services only make up 21 percent of total healthcare costs. She added that insurers are worried about the cost “to their shareholders, not their customers.”
Azam expressed concern that the bill, when combined with the growth of tiered insurance plans like Horizon Blue Cross Blue Shield’s OMNIA, would give insurers too much power to underpay doctors.
Instead of a provision of the bill that requires binding arbitration, the society had instead called for the state to build on an existing process in which a provider who isn’t affiliated with the doctor in the billing dispute reviews the case.
While the bill includes the opportunity for a doctor to ask for a “peer review” of a dispute by outside doctors, requesting this review will raise the costs to the provider. The society wants insurers to pay for the peer review. In addition, this peer review would be just one element considered by the arbitrator in making a binding decision.
Azam noted that the bill requires that the details of billing-dispute settlements be made public, which insurers could use to drive down costs in future disputes.
“We don’t think this is the right way to encourage quality physicians to come to this state,” Azam said. “It’s an unprecedented opening up of how payments are going to be lowered and lowered and lowered here.”
Andrew Schlafly, the general counsel for the Association of American Physicians and Surgeons, said the bill leaves insurers in a strong position to use arbitration to lower payments. Doctors would either be forced to accept whatever the insurer is offering to be in the insurer’s network, or risk being paid less if they remain out-of-network.
“This bill really chokes off the option of going out-of-network,” he said.
Wardell Sanders, president of the New Jersey Association of Health Plans, countered that some doctors and hospitals have consciously refused to remain within insurers’ networks and used the state law requiring insurers to pay emergency bills to gouge insurers. He added that this leads in some cases to insurers paying 40 to 60 times the amount paid by Medicare for the same procedures.
The state’s largest employer group, as well as consumer advocates, came to the bill’s defense.
Mary Beaumont, vice president of health and legal affairs for the New Jersey Business & Industry Association, said the bill struck the right balance in protecting consumers and allowing self-insured plans to decide whether the bill’s provisions will cover them.
“Out-of-network costs play an increasingly important role” in overall healthcare costs, she said.
Maura Collinsgru of New Jersey Citizen Action said two pieces of the bill are particularly important. One would require patients to “knowingly, voluntarily, and specifically” select out-of-network providers. The second allows those covered by self-funded employer plans to seek arbitration when they’re hit with surprise bills, even if their plan isn’t otherwise covered by the bill.
All of the Democrats on the Assembly Financial Institutions and Insurance Committee voted to release the bill, joined by Assemblyman Jack M. Ciattarelli (R-Hunterdon, Mercer, Middlesex, and Somerset). Three Republicans abstained from the vote. The Healthcare Price Index bill also was released, with all Democrats, Ciattarelli, and Assemblywoman Caroline Casagrande (R-Monmouth) voting to release it.
The Senate version of the bill hasn’t been scheduled for a committee vote yet, but sponsors are hopeful that it will pass both houses and Gov. Chris Christie will sign it before the legislative session ends in January.