No Remedy Yet to Cure ‘Surprise’ Out-of-Network Charges

Insurers, hospitals, doctors, and patient advocates struggle for consensus on an equitable way to handle unexpected expenses

Patient advocates, healthcare providers, and insurance companies have struggled for the better part of a decade to reach consensus on a plan to limit “surprise” out-of-network medical charges for New Jersey residents. While several stakeholders agree they are getting closer to a solution, significant sticking points remain between the hospitals and doctors that provide treatments and the insurers that pay the bills.

Sen. Joseph Vitale (D-Middlesex), met with provider representatives, insurance officials, and leaders of a patient rights coalition several times over the summer to discuss possible changes to the latest legislative proposal.

The measure (S1285) seeks to ensure patients are clear on what their insurance will cover and establishes a binding arbitration process to resolve payment disputes. Vitale said it could get a hearing in the coming weeks; an Assembly committee approved their version in June.

The proposal is a legislative priority for the NJ For Health Care coalition, which includes dozens of healthcare, labor, business, and public-service advocacy organizations that have joined forces to continue efforts to expand access to healthcare. The group sent letters to legislative leaders in August, urging them to commit to advancing the bill.

At a conference earlier this month, coalition leaders said the costs associated with these charges are one of the main reasons residents in New Jersey continue to struggle to afford quality medical care, even if they do have health insurance. Members will gather again on Tuesday, in New Brunswick, to build support for the measure.

[related]“This is a huge issue and certainly a priority for the coalition,” said Ray Castro, a healthcare analyst at New Jersey Policy Perspective, a member of the group. Some 168,000 residents are socked with surprise bills each year, totaling $400 million in charges, according to an NJPP report.

While there is general agreement on the need for better patient education and more disclosure among hospitals and physicians, healthcare providers and insurance companies have yet to agree on how billing disputes should be resolved. Those treating patients remain concerned that the process spelled out in the current bill fails to cover their full costs; insurance carriers have blamed hospitals for overcharging patients and driving up system-wide costs.

Chuck Bell, a healthcare expert with Consumers Union, said the voices of these powerful interest groups have tended to drown out those fighting for patient protections. The problem is not unique to New Jersey, he noted. Some 30 percent of Americans receive a surprise bill, he said, and roughly one in four is pleased with how the issue is resolved.

“We must prioritize consumers over profits and pass a bill that expands protections while reining in costs,” wrote Maura Collingsgru, healthcare program director for New Jersey Citizen Action, which heads the coalition.

The issue is also a priority for the New Jersey Hospital Association, explained Neil Eicher, the vice president of government relations. The association’s board has tasked staff with working on the legislation to “solve this problem,” he said, “and we are very, very close to making that happen.”

NJHA has agreed they can do more to help patients understand how they might be billed for services they receive at any facility and has agreed not to bill patients for any balance when there is a discrepancy, Eicher said. “The patient is not going to be the middle man,” he said.

But the association, which represents the state’s 72 acute care facilities, remains concerned about the arbitration process now proposed to resolve disputes over certain emergency charges. The bill ensures that patients would not be responsible for the full bill if they had to go to an emergency room at an out-of-network hospital; instead they would only pay in-network prices.

The hospital would then need to negotiate with insurance carriers to be reimbursed for any costs not covered by the patient’s in-network payment. If discussions fail, the state would hire an outside arbitrator to resolve the conflict. This arbitrator would assign a final payment between 90 percent and 200 percent of the Medicare rate for the procedure in question. Eicher said this is a losing formula for hospitals since Medicare already covers just 90 percent of the full cost in New Jersey.

The bill also calls for greater transparency regarding out-of-network payments in general. It calls on state officials to compile and post online information about the number of arbitrations each year and the outcomes. The measure requires carriers to make it clear to customers how they can dispute out-of-network charges and spells out how insurance companies must keep current all public information on provider networks.

Sarah Adelman, vice president of the New Jersey Association of Health Plans, which represents carriers, said they have supported the measure in the past but do have concerns about the current bill’s arbitration process. AHP has highlighted how charges at some Garden State hospitals are far higher than the national average, leaving patients responsible for outrageous bills and driving up healthcare costs in general.

Vitale said balancing these demands has been challenging, but they are close to a resolution. “I believe we’ll get there,” he said. “But we’re not going to give away the store” to benefit any one stakeholder, he added.

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