NJ Set to Enact Insurance Law, So Is this the End of ‘Surprise’ Medical Bills?

Lilo H. Stainton | April 13, 2018 | Health Care
Most interest groups support controversial measure to control out-of-network insurance costs, but many physicians unhappy

It has been nearly a decade in the making, but New Jersey could soon have one of the nation’s most comprehensive laws to protect patients against “surprise” medical bills and control certain healthcare costs thanks to a bill that cleared the Legislature yesterday, which Gov. Phil Murphy has promised to sign.

The controversial proposal to control out-of-network insurance costs — a longstanding priority for patient groups, labor and business groups, and the insurance companies that foot these bills — squeaked by in both the Assembly and Senate yesterday. It did so along party lines, with Democrats supplying all the “yes” votes in both houses. Many physicians oppose the reform, particularly specialty groups, who fear it will force them out of business and harm patient care.

The legislation is designed to protect patients against high-cost bills for emergency care or unanticipated treatment from doctors, hospitals, and other providers who are not part of their insurance network; it would not apply to charges from an out-of-network physician they visited by choice. The plan involves greater network and provider transparency to help patients navigate the system and independent arbitration to resolve disputes between insurance companies and providers, a mechanism aimed at containing costs.

All about consumer protection

“This journey, from the beginning … has always been to provide consumers protection against surprise medical bills and balance billing,” or when patients are billed for the portion of the charge not covered by insurance companies, said Sen. Joseph Vitale (D-Middlesex), the longtime chair of the health committee who has doggedly pursued the reform along with Assembly Speaker Craig Coughlin (also D-Middlesex). While all stakeholders endorsed the idea of greater transparency — and several other bills have been introduced to address that aspect — Vitale said that alone was not enough to solve the bigger problem.

“Just simply saying that a provider cannot balance bill a patient does not get us where we need to be,” Vitale said. A mechanism to control cost was essential to protect patients who make conscious choices to see in-network providers, but suddenly require a specialist who is not part of the same system — a problem Yale University researchers found happens to as many as one out of five emergency-room visitors. “No matter of transparency — and there’s plenty of transparency in this bill — will prevent that,” Vitale added.

Advocates for change believe some 168,000 New Jerseyans get a “surprise” medical bill each year, averaging $2,500 per person; the problem also adds roughly $800 million to taxpayers’ tab to insure state workers, and as much as $1 billion in insurance costs, much of which is borne by policy holders through increased premium charges.

Thousands of dollars

“Far too many New Jersey families, even those with quality health benefits plans, find themselves fighting over thousands of dollars in out-of-network charges they never even had the opportunity to review — let alone agree to — before receiving medical attention,” Coughlin said. “This is about putting patients first and defending the consumer’s right to be able to make an informed decision about how to proceed with his or her healthcare.”

Reducing the impact of out-of-network bills became a talking point for former Republican Gov. Chris Christie, who included potential savings from the pending reform in the current budget. Murphy, a Democrat who took office in January, factored savings into his spending proposal for next year and endorsed the Coughlin/Vitale bill by name during his budget speech in March. The reform was also flagged as a priority for the new administration by Murphy’s healthcare policy transition team; several other states, including New York and California, have already enacted laws designed to address the same problem.

In New Jersey, a family pays $18,000 on average for an employer-based health insurance policy — the 13th highest in the nation — or $23,000 if purchasing a policy directly through the individual market, according to New Jersey Policy Perspective, a left-leaning think tank. Insurance costs remain the top concern for small businesses year after year and the number of residents covered by these employer plans has dropped by half, from 740,000 to 371,000, since 2010, NJPP found.

“Simply put, insurance is becoming unaffordable in New Jersey, especially for middle class families who are not eligible for public coverage or subsidies,” said NJPP’s director of health policy, Raymond Castro. “While it took many years to finalize this bill, it demonstrates that the legislature can take on powerful interest groups and establish policies that will benefit consumers.”

Put physicians out of business?

Mary Beaumont, vice president for health affairs at the New Jersey Business and Industry Association, also praised the legislation, which she said would help businesses contain costs at an increasingly challenging time. “The bill strikes a fair balance between reasonable compensation to facility-based providers and consumer protection,” she said.

But one powerful stakeholder group has remained opposed to the reform, a position reflected in the comments of some Republicans yesterday. The hospital industry came to fully endorse the plan after amendments were added last week that addressed some of their initial concerns. But emergency-room physicians, specialty groups, and the Medical Society of New Jersey remain strongly opposed to the bill. They said it would harm their ability to negotiate with insurance companies and to maintain the reimbursement rates they need to continue doing business in a high-cost, heavily regulated state like New Jersey. If they are forced to leave the state, or go out of business, they claim patients will be the ones that suffer.

“I’m not supporting the bill — not that I’m not consumer friendly, not that I’m not concerned about (the issue), but I am concerned about making sure we keep our doctors in New Jersey. That we make sure that the specialists are here to treat our children, our aging population, and all of us here in New Jersey,” explained Sen. Robert Singer (R-Ocean), a longtime health committee member, who opposed the measure.

“We are deeply disappointed that the Senate voted today to approve legislation that will enrich big insurance companies, reduce patient choice and force specialists to move their practices to other states that are less hostile to the medical profession,” said Dr. Pete DeNoble, president of the New Jersey Doctor Patient Alliance, which had testified against the measure in committee.

Transparency is key

The bill (A-2039/S-485), which was also sponsored by Sen. Teresa Ruiz (D-Essex), and Assemblyman Gary Schaer (D-Bergen), and more than a dozen other Assembly Democrats — titled the Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act — requires providers to make sure patients are clear on the network status of their physicians and other healthcare professionals, and to clearly post information online about what insurance plans they accept.

Insurance carriers would be required to keep current network listings on their own websites, clearly describe their out-of-network policies, and provide examples of standard out-of-pocket cost scenarios. They would also be forced to file information with the state about claims’ denials and so-called down-coding, in which treatments are reclassified to reduce their reimbursements. The bill also enables self-funded plans, which are typically federally regulated and cover more than half of New Jerseyans, to opt in and access the same potential savings available to state-regulated plans.

The main point of controversy about the legislation involved issues related to resolving disputes between insurance companies and providers. The bill outlines a timeline and other parameters for negotiations and calls for the state to hire an independent expert to settle the matter if two parties can’t reach a resolution; the arbitrator must then decide between final offers presented by each side.

Cathy Bennett, the president and CEO of the New Jersey Hospital Association, said that, with changes added last week, the bill addresses their key priorities: protecting patients and ensuring a “level playing field” for provider negotiations with insurance companies. “It’s a good day when a diverse group of individuals and organizations can find common ground for the sake of healthcare consumers,” she said, urging Murphy to sign the measure soon.