Budget Debate Delays Potential Out-of-Network Insurance Reform

Stakeholders, lawmakers, and even critics agree that taming surprise medical charges is a critical issue for healthcare sector to address successfully

Once framed as an urgent priority for New Jersey by Gov. Chris Christie and some lawmakers — as well as a broad coalition of patient advocates, labor leaders and business interests — a proposal to reduce out-of-network medical bills failed to make it to the legislative finish line last week.

A revised version of the controversial measure to curb so-called surprise health insurance charges, under development for nearly a decade, passed a Senate committee Monday and was amended by the full Assembly Thursday. But there were not enough supporters on hand to get the bill passed by the full Senate on Thursday or Friday, when lawmakers were called back to Trenton to wrangle over the stalled budget process, an ordeal that took precedence over this and other items scheduled for a vote.

As a result, Sen. Joe Vitale (D-Middlesex), the chair of the Senate health committee who has led the effort to address out-of-network charges, plans to spend time this summer meeting with other legislators and stakeholders who have raised concerns about the proposal. He and the bill’s supporters hope it will be posted for final votes in both houses later this year, after lawmakers return to Trenton following the gubernatorial election in early November.

‘Not a defeat’

“Budget maneuvering seems to have sidelined many things — OON being one of them,” said Citizen Action’s Maura Collinsgru, who has coordinated the work of the New Jersey for Healthcare coalition, the leading advocate for the reform. “While we’ve not had a chance to talk about next steps, we will continue to push for comprehensive OON reform,” she said. “Another timeout, but not a defeat!”

But a new stakeholder group, the New Jersey Doctor-Patient Alliance, plans to use the next few months to help the public better understand the out-of-network issue — and what their insurance will cover — and work with advocates like the coalition members to explore alternative solutions.

“If we can get the proper communication and transparency, we can solve this problem on our own,” said Dr. Peter DeNoble, an orthopedist and founding member of the alliance. DeNoble said he hoped to reveal more about their proposal soon, adding, “We want to create a favorable environment for doctors and patients.”

Escalating concern

Concern over out-of-network charges has continued to escalate in recent years, as advocates and government regulators seek new ways to curb the ongoing growth in medical costs; the topic was the focus of an NJ Spotlight Roundtable in January.

Christie raised the issue in February as part of his budget proposal — when he included $125 million in savings to the State Health Benefits Plan for public workers, to result from reform. Democrats later revised the language to allow for those potential savings in the $34.7 billion budget for 2018 approved Tuesday, but without mandating any reform bill.

At the same time, executives at Horizon Blue Cross Blue Shield, the state’s largest health insurance provider, emphasized the need for a resolution of the out-of-network issue in their opposition to Christie’s efforts to siphon off $300 million from their reserves to fund anti-addiction efforts. (The dispute over Horizon’s reserves, which held up a budget vote and triggered a state shutdown, was resolved when lawmakers approved and Christie signed a separate bill to reform Horizon after midnight Tuesday.)

Non-network expenses, including pre-planned visits, cost the State Health Benefit Plan nearly $900 million in 2016 and, according to the healthcare coalition, some 168,000 Garden State residents now pay an additional $400 million in annual out-of-network costs. While New Jersey law protects patients from being charged extra for emergency care at out-of-network facilities, it does not prevent providers from billing insurance companies for these higher rates, a process advocates said has added $1 billion to state premium costs in recent years.

Greater transparency

Most stakeholders agree that greater transparency about how hospitals and physicians bill for procedures, and what insurance companies cover at what rate, is a critical part of any reform. The Medical Society of New Jersey insists that any proposal to regulate provider rates would eliminate the only leverage doctors and hospitals have in negotiating with insurance companies over network participation.

The MSNJ and the Doctor-Patient Alliance are among those that support transparency-only bills — including one introduced in May by Sen. Paul Sarlo (D-Bergen), the head of the budget committee — that provide for additional disclosure by hospitals, physicians, and insurance companies, without controlling costs. While some providers have made headlines for outrageous out-of-network bills, these are outliers in the profession, the groups said.

Regulation that sets rates “Is like a parent saying, ‘You kids couldn’t figure it out on your own, so we’re going to come up with a solution that is bad for everyone,” DeNoble said. A survey the group conducted of more than 100 physicians suggested that this type of legislation would make half of them consider leaving New Jersey and one in five think about leaving the profession altogether.

‘Reining in’ high costs

But some, including the coalition members, insist true change depends on a measure that also controls the underlying charges assessed by providers. Real out-of-network reform is “essential to reining in the high cost of health insurance” now faced by small businesses, noted Mary Beaumont, a vice president with the New Jersey Business and Industry Association, urging lawmakers to adopt Vitale’s measure last week.

“We need a plan that provides transparency and cost containment,” she said. “We believe this bill delivers on both counts.”

Vitale’s bill — which was shuffled between several committees after last-minute revisions in December designed to secure support from the New Jersey Hospital Associations, led to it being pulled from a list of scheduled votes — was approved Monday by the Senate budget committee after Vitale sat in for Sarlo as the chairman and helped advance a controversial bill to reform Horizon, which he also sponsored. The out-of-network measure passed by the slimmest of margins, with support from the seven Democrats while the six Republican members abstained.

On Thursday, the Assembly also amended a previous draft of the bill to align with the Senate version. Kerry McKean Kelley, who leads communications for the hospital association, said the organization also continues to work with Vitale and other sponsors in hopes of reaching an agreement.

As approved, the revised bill (S-1285) calls for a transparent pricing system in which patients could get price quotes for specific procedures, in advance of any appointment, to allow them to comparison shop. The measure would also help protect patients from being caught in the middle of any billing disputes between medical providers and insurance companies, or being charged for “inadvertent” out-of-network charges assessed by physicians without the patient’s knowledge.

The biggest change involves the mechanism that would be used to resolve billing disputes that do arise. While a previous version would have set a maximum out-of-network payment rate at 250 percent of the Medicare payment for the procedure, the amended bill includes a “baseball style” arbitration model in which an independent arbitrator would select between final offers made by the provider and insurance company if the two sides could not agree within 30 days.