If you've been looking for the hospital bill that illustrates the difference between in-network and out-of-network costs — and the fight between hospitals and insurers that goes with it — we've found it.
That's what happened when reports of an $8,775 bill from Bayonne Medical Center to bandage a cut finger in the emergency room surfaced.
And while all parties involved admit the cost is out of line, how to fix it — and who is at fault for it — is not so easily agreed upon.
The bill, the result of an emergency room visit from a Bayonne man in 2013, has reignited calls for Trenton to clamp down on excessive “out-of network” ER costs that can result when patients show up to a hospital that's not in their health insurance company's network.
But the passionate response from health care stakeholders — with hospitals questioning whether insurers pay them a fair rate, and insurers contending some hospitals abuse out-of-network charges to shore up revenue — suggests it could be just as tough to find a consensus now as it was in 2010, when lawmakers tried and failed to regulate out-of-network hospital bills.
State Sen. Joseph F. Vitale (D-Woodbridge) said he's ready to try again.
Vitale said in the Bayonne case, insurer UnitedHealthcare “was slammed for thousands of dollars for taking care of what was essentially a booboo. And that is absurd.”
He noted that under state law, a patient who gets emergency care at an out-of-network hospital is supposed to encounter the same billing terms as if that hospital were in-network. The insurance company, however, may have to pay hospital “charges” — prices that hospitals post but then routinely negotiate downward when they join an insurance company network.
And here's the problem with that: When insurers pay high out-of-network charges, those costs get baked into the health insurance premiums that everyone pays.
UnitedHealthcare, which does not have a network contract with Bayonne, paid the hospital a little more than $6,200, according to spokeswoman Mary McElrath-Jones. She said the balance was the patient's responsibility.
The patient has paid nothing on the bill to date, according to a spokesperson for CarePoint Health, the for-profit company that over the past six years has acquired and rescued from bankruptcy three Hudson County hospitals: Bayonne, Hoboken University Medical Center and Christ Hospital in Jersey City.
The spokesperson also said Bayonne hasn't waived the patient's balance and that the hospital negotiated a discount on this particular bill directly with the insurer.
“(Bayonne has) chosen to pursue an out-of-network strategy in New Jersey,” McElrath-Jones said. “In contrast, most hospitals in the state have been innovating to remain efficient and competitive and have been partnering with insurers to try to improve quality and reduce costs. Examples abound in New Jersey and across the country of affordable care partnerships between hospitals and insurers.”
The CarePoint spokesperson, however, fired right back.
“Insurance companies play a significant role in driving high charges at urban hospitals that serve the poorest and most needy people in our communities,” he said.
He said 43.6 percent of the patients that Bayonne sees in its ER are either uninsured, on Medicaid or rely on state-funded charity care.
“Insurance companies' inadequate payments have been one of the major reasons that community hospitals like Bayonne were driven to the brink of closure,” he said. “Hospitals are forced to set high rates for their medical treatment — this is their only tactic to try to negotiate with insurance companies for reasonable reimbursement rates.”
Vitale, a veteran Trenton negotiator, is trying to take a middle ground.
“Look, I'm not an apologist for the insurance companies, but sometimes they don't reimburse a smaller hospital the way they'd reimburse a larger hospital,” he said. “But the larger hospitals also have greater expenses, because they are teaching hospitals or have advanced equipment and more comprehensive facilities.”
Vitale said he feels small community hospitals sometimes aren't reimbursed enough.
“But that doesn't justify charging insurance companies thousands of dollars for something that probably could have been taken care of in a doctor's office,” he said.
Finding a solution
So how does this get fixed?
In 2010, the New Jersey Health Care Quality Institute convened weeks of meetings among health care stakeholders to forge a consensus on a bill to regulate out-of-network hospital bills — and the group is willing to do it again, said Linda Schwimmer, the organization's vice president.
She said one approach would be to create a database of actual claims paid for various hospital procedures in New Jersey and use that to create benchmark rates for ER services. The out-of-network ER rates could then be some multiple of that benchmarked rate, with disputed cases going to arbitration.
“The key thing is to get the stakeholders back together and the institute would be willing to convene that,” Schwimmer said. “The really extreme examples (of ER bills) are bubbling up to the media, but that's not solving the issue — and it's very solvable.”
The CarePoint spokesperson said Bayonne does participate in several insurer networks, including the state's largest, Horizon Blue Cross Blue Shield, and Empire Blue Cross, AmeriHealth, Emblem/GHI, MagnaCare, Health First, Amerigroup and Horizon NJ Health. He said Bayonne “continues to have meaningful discussions with those insurers it is not currently in network with.”
Aetna spokeswoman Susan Millerick disagreed with that assessment. She said the company has two Hudson County hospitals in its network, Palisades Medical Center in North Bergen and Meadowlands Hospital and Medical Center in Secaucus. It's also currently negotiating with Jersey City Medical Center.
“The other hospitals in Hudson County actively terminated their agreements with us, choosing to go out of network and stay out of network,” she said.
Kerry McKean Kelly, spokeswoman for the New Jersey Hospital Association, said sky-high hospital charges generate tremendous controversy, but she said only about 5 percent of patients are billed at full charges, since most have coverage with commercial insurers, Medicare or Medicaid, which negotiate lower prices with hospitals.
She noted a 2008 New Jersey law that caps hospital charges for insured patients with income below five times the federal poverty level, which is $117,750 for a family of four.
Kelly said hospital charges “evolved over time as hospitals attempted to recover some revenue when key customers like Medicare or Medicaid paid hospitals at rates that fall below the actual cost of care.”
If you think the Affordable Care Act was supposed to solve all these problems, think again.
Kelly said it's become tougher for hospitals to recover that lost revenue as the Affordable Care Act “puts the squeeze on hospital payments for Medicare and Medicaid and insurance companies try to negotiate further rate reductions with hospitals.”
More than just a bill
Suzanne Ianni, chief executive of the Hospital Alliance of New Jersey, whose members are safety-net hospitals serving the state's low-income population, said the issue is about so much more than just one bill.
“We all can agree that $9,000 for a Band-Aid is a headline grabber and seems illogical and unfair,” she said. “But there is much more to this story.
“Some hospitals are able to negotiate satisfactory rates with insurers and establish contracts with them. Others, often those that treat a large portion of Medicaid and Charity Care, find themselves at a disadvantage when negotiating rates with insurers.
“If we cap the rates that hospitals can receive from out of network insurers, we then tie the hands of the hospitals when trying to negotiate fair rates. Why would the insurer work to negotiate when they know they'd only be responsible for a capped rate if a deal isn't reached?” ?Joel Cantor, director of the Rutgers Center for State Health Policy, said the current state of affairs puts patients in the middle and increases costs to insurers that cover out-of-network benefits.”
“(Health care may be) the only product where you don't know its price until after you have made the purchase,” he said. “This leaves patients at tremendous financial risk.”
Cantor said the wave of hospital consolidations across the state and country may not necessarily help.
“(It) strengthens the bargaining position of hospitals relative to the private payers, but at the same time puts upward pressure on health care costs,” he said.
“Hospital charges that appear to be unreasonably high will bring pressure for the Legislature to regulate fees.”
That, of course, is easier than it sounds.
Just ask Vitale.
He said he will hold hearings and introduce comprehensive out-of-network legislation this fall.
Of course, that took place in 2010 to no avail.
“(The legislation) fell apart because (lawmakers) at the end of the day met with too much resistance from too many special interests,” he said. “Some of those groups just got greedy and no legislator can work in good faith with people or organizations who are only concerned about maximizing their profits at the expense of the people who pay the bills.”
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