Op-Ed: Out-of-Network Bill Is Insurers’ Dream and Middle-Class Nightmare

Peter DeNoble | April 5, 2018 | Opinion
Impending legislation would lead to job losses in medical practices, drastically cut physician reimbursements, and damage emergency care

Peter DeNoble
As Trenton currently looks to balance the budget, once again it’s our state’s hardest-working citizens who will be left holding the bag. This time, though, it will be the hardworking office and ancillary staff from our small-business private medical practices.

A bill called “The Out-of-Network Consumer Protection Bill” (A-2039/S-485) looks poised to make it to Gov. Phil Murphy’s desk in the coming weeks, designed by insurance companies to decapitate out-of-network providers themselves. But what the governor and other state legislators have completely overlooked in their zeal for this initiative is the innocent bystanders who this legislation hurts the most: the thousands of hard-working middle-class New Jerseyans who work for the enormous nexus of small-business private medical practices around this state.

While the bill is complex, in a nutshell it uses a heavy-handed arbitration model to line the pockets of insurance companies while drastically cutting reimbursements to the independent physicians who provide the bulk of emergency care in our state’s 72 emergency rooms. With far fewer specialists available in your local hospitals, it will make the overpriced benefits of all New Jerseyans worthless, as these doctors will not be available at all hours to cover emergencies such as strokes and traumas.

Revenue shortfalls, unemployment lines

But even if our legislators aren’t concerned with a dearth of specialists in our local emergency rooms, slashing physician reimbursement rates will have the real effect of jeopardizing the jobs of many hardworking middle-class New Jerseyans who work tirelessly on behalf of our practices and patients. For some perspective on the scope of the economy this bill targets, the American Medical Association’s 2018 “Economic Impact Study” concluded that each physician in New Jersey supports 12.4 jobs, and physicians collectively infuse $20.5 billion directly into wages and benefits for their employees.

My colleagues and I unanimously agree that we could not function as physicians without our dedicated staff, many of whom have loyally served our patients for several decades. And, as the emergency-care segment of New Jersey’s enormous healthcare economy collapses under the weight of revenue shortfalls, many of these former New Jersey middle-class taxpayers will be forced to enter the local unemployment lines, uncertain about their futures in this state. Could this really be Gov. Murphy’s opening salvo after spending the past year promising to “grow and protect the middle-class”?

Sadly, cutting reimbursements to doctors will do nothing to save even one dime for union members and hardworking middle-class, desperate for relief from their egregiously-inflated premiums. How do we know this? Because similar laws passed in other states, including California, Maryland, and Illinois, have never yielded the savings promised by their politicians. Furthermore, Gov. Murphy himself admitted in his own budget statement (page 19) that change to out-of-network “is not anticipated as a savings to the State budget for fiscal 2019.”

Why be a doctor in New Jersey?

As Seton Hall establishes its brand new medical school this year, this bill simultaneously creates inhospitable economic realities for physicians. In fact, a report just last week from WalletHub found that New Jersey currently ranks as the worst state for doctors to practice in the United States. Putting the screws to physicians with A2039/S485 will only further deter future graduating doctors from building their careers in New Jersey, not to mention the countless potential jobs that will never be created to support these doctors.

With all that said, New Jersey consumers still deserve protections from surprise medical bills, so where should we turn? The state’s medical organizations all agree that New York should serve as an appropriate bellwether. Another high cost-of-living state like New Jersey, New York passed a bill into law in 2016 that protects both consumers from surprise bills and preserves its independent doctors and their thousands of employees. The key difference in New York’s law is that its arbitration model for fee disputes between physicians and insurers is directly linked to the FAIR Health fee schedule. FAIR Health is a nationally-recognized, independent benchmarking service that has already been adopted by several other states, including New York and Connecticut with good results.

Fortunately, New Jersey’s politicians still have time to protect access to care for millions of New Jerseyans and protect the jobs of countless middle-class employees by implementing the FAIR Health amendment to the A-2039/S-485 arbitration process. The futures of healthcare in New Jersey — and thousands of middle-class jobs — depend on it.

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