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Updated: Out-of-network health care bill's creators are hearing from stakeholders

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(Editor's note: This report was updated at 12:55 p.m. with comments from Dennis Kelly of CarePoint Health and at 3 p.m. with comments from John Sarno of Employers Association of New Jersey and Betsy Ryan of the New Jersey Hospital Association.)

The lawmakers sponsoring landmark legislation to regulate the surprise medical bills New Jerseyans and their health plans can face from out-of-network health care providers are holding a daylong session Friday to hear from stakeholders impacted by the legislation, which tackles what many experts say is a major driver of the state's high health care costs.

Assemblymen Craig Coughlin (D-Woodbridge), Gary Schaer (D-Passaic) and Troy Singleton (D-Mount Laurel) and Sen. Joseph F. Vitale (D-Woodbridge) are hearing from more than 50 stakeholders today, including hospitals, physicians, health insurers, unions and consumer group.

Coughlin told NJBIZ: “We are going to hear from folks from across the heath care community that are going to be affected by the bill. We’re going to spend a lot of time with them, hearing what suggestions they have to make the bill better.”

Assembly bill 4444 and the identical Senate version, S20, protect patients from getting hit with what can be sky-high bills when they get care from doctors and hospitals who aren’t in their health plan network. Patients would be protected from surprise medical bills when they get emergency care at either an in-network or out-of-network hospital, and it would also protect them from inadvertent out-of-network bills: for example, when the patients choose an in-network facility, then get some of their care from specialists, such as an anesthesiologists or pathologists, who aren’t in their health plan network.

The bill establishes a new payment system that out-of-network providers will use to bill the patient’s health plan. It creates a new health price index, based on the actual claims paid by health plans and other payers to hospitals and health care providers in New Jersey. The index would be the median claim actually paid for medical procedures, and the out-of-network provider would be able to bill the patient’s health plan between 75 and 250 percent of that index. Disputed bills would go to mandatory arbitration.

Introduced last week, the bill met with immediate opposition from the Medical Society of New Jersey, the state’s largest physician organization, and a favorable reception from the New Jersey Association of Health Plans, whose members include health insurers and other health care payers.

Coughlin said: “The overwhelming response that we’ve gotten from consumers has been incredibly favorable. People who have come to talk to me about the bill usually have a story about where they have gotten surprise bills, where they had costs that they didn’t anticipate.”

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Coughlin said he would like to get a vote on the bill before the legislative session ends June 30, but “we don’t have a timetable yet” for action on bill. If it’s not voted on by June 30, Coughlin said it would be taken up when the Legislature reconvenes in September or October.

He said of today’s stakeholder session: “We’re going to come with an open mind and open ears. We think we’ve done a really good job of putting together a bill that is fair.”

A previous legislative effort to reform out-of-network medical bills in 2011 was unable to overcome strong opposition.

“It has taken a long time to get to this point,” said Coughlin, who chairs the Assembly insurance committee. “My committee has been working on this for over a year. This issues have been out there, so this is not new territory. But the bill is new: It is a multifaceted, complex bill.”

He said that, given the longstanding challenges facing efforts to reform out-of-network medical bills, “I’m reluctant to say we’re going to get this done by any specific date. It has historically been something that has taken some time.”

The Communications Workers of America, whose membership includes state government workers, has not taken a formal position on the bill, but “It seems very positive to us,” said Dudley Burdge, spokesman for CWA. He said that, under the current system, CWA members can be hit with surprise bills from out-of-network providers who bill the patient for the balance of the bill that is not covered by the state health plan. He said the proposed legislation “Is a move in the right direction, in terms of protection of our members from balance billing, and it should save money for the state health benefit plan and other plans that CWA members participate in.”

Opponents include the New Jersey Association of Ambulatory Surgery Centers, which said in a statement: “While NJAASC agrees with the need to bring common sense reform to the

System, the depth and breadth of the bill forces NJAASC to oppose. The bill would create complicated disclosure, consent and reporting requirements and increase the compliance burden on an already overburdened provider community.”

Supporting the bill is the New Jersey Carpenters Funds, which provides a self-funded health plans for the state’s carpenters.

George Laufenberg, administrative manager of the carpenters funds, said a good feature of the bill is the health price index, because it is based on the fees “that doctors actually accept and agree to accept,” rather than a fee schedule based on health care “charges” that are typically far higher than the actual payments that providers negotiate with payers.

Jack Sullivan, health benefits manager for the New Jersey Carpenters Funds, said in a statement to the legislators that the fund “has felt for many years the need to address the out-of-network situation when patients receive services from providers that are out of network with their insurance plans. This can happen in an emergency situation or through scheduled procedures when out-of-network providers are called in.”

Sullivan said: “We all know about the emergency room doctors or anesthesiologists who perform services that are out-of-network and the patient had no choice in selecting these providers. This situation may also occur when a patient goes to an in-network hospital, with an in-network surgeon, only to find out that an assistant surgeon was required (many times mandated by the hospital) who winds up being out-of-network. In those cases, the in-network surgeon is paid as payment in full and the assistant surgeon will balance bill as an out-of-network provider demanding full reimbursement of their charges from the member.”

Sullivan said: “These situations are clearly unfair for all consumers of health care. The need for an established fee schedule for these out-of-network providers, who can charge whatever they want, is clearly evident.”

He said between 80 percent and 90 percent of New Jersey doctors belong to insurance networks, and most of those who are out-of-network don’t charge egregious rates.

“Therefore, this bill should be amenable to those providers and stop those OON providers who continue to bill outrageous charges, because they can.”

Significant concerns about the bill are being raised by the New Jersey Academy of Family Physicians, which has more than 2,000 members.

In a statement, the academy said most of its members are in-network doctors: “As ‘in network’ physicians, family physicians understand the concept of the inadvertent out-of-network situation that patients and referring physicians cannot possibly anticipate. However, this bill is so broad that it impacts ‘in-network’ primary care procedures performed in an office setting.”

The disclosures to consumer required by the bill “add more administrative responsibilities to in-network primary care practices and unnecessary paperwork for patients, who are already overwhelmed with the all of the paperwork to sign before an office visit — particularly our seniors.”

Ward Sanders, president of the New Jersey Association of Health Plans, the trade group for health insurers, said in a statement: “NJAHP applauds legislators for taking on the issue of predatory pricing and surprise bills in health care. The problem and its impact on consumers are indisputable: Predatory pricing and surprise bills make health care more expensive for consumers and employers. The more difficult challenge is crafting effective policy solutions to address these problems. We think the bill’s focus on protecting consumers and transparency is well-placed and central to its success. We do have some concerns with elements of the bill related to the most effective way to contain costs, but we think the problems and complexity can be addressed in a way that continues to protect consumers and employers.”

Dennis Kelly, chief executive of CarePoint Health, which operates three Hudson County hospitals, said he has major concerns about the bill, major legislation that he said is too complex to come up for a vote in Trenton before the end of June.

Rather than regulate out-of-network billing, Kelly said, he wants “a comprehensive solution where providers get equivalent reimbursements regardless of the neighborhood the patient lives in.” 

He said that, in 2014, CarePoint had 21,000 encounters with out-of-network patients, while 279,000 patients were in-network. CarePoint is a safety net health care provider to the poor, and he said higher reimbursements for out-of-network care helps to subsidize patients who are covered by Medicaid and charity care, which do not fully cover his costs. Instead of continued cost-shifting, and rather than impose caps on out-of-network billing, “We need to protect the people who are vulnerable and make sure that every single individual has access to primary and specialty care.”

Suzanne Ianni is chief executive of the Hospital Alliance of New Jersey, whose members are the safety net hospitals that serve low-income New Jerseyans.

In a statement, Ianni said, “We have serious concerns about the selection of a median to create a range of reimbursement” for out-of-network medical bills.

“Medicare recognizes that every procedure not only has a standard base payment, but also is adjusted by a number of factors representing case acuity, geographic market, the additional cost of more vulnerable patients, and other services the hospital provides. It is much too simplified to establish a median (middle number) of all cases statewide without recognition of these factors. While we are not privy to confidential negotiations between hospitals and health plans, it is logical that many of these factors are considered in the negotiated rate.”

Ianni said: “We need to recognize that the large inner-city academic medical center serves a high proportion of low-income patients. If commercial payments are restricted to an arbitrary median, hospitals such as a large inner-city academic medical center are vulnerable to reduced payments, which do not reflect the market conditions in which the hospital operates. Any claims collection system must recognize and differentiate the various types of hospitals, including the market and patients they serve.”

John Sarno, president of the Employers Association of New Jersey, said EANJ supports the bill's creation of a health care price index "to increase transparency in health care cost and utilization patterns in New Jersey and to provide employers, consumers, policymakers, providers, researchers, quality improvement organizations and carriers with the information needed to support necessary health care reforms that will lead to a more cost-effective, high-quality health care system that benefits the citizens of this state."

However, Sarno said, the bill "does not sufficiently address the dissemination of this critical information to employers and other purchasers of health care, except to say that the organization that will be creating and maintaining the HPI 'should identify and electronically publish annually' a list." 

He said EANJ suggests that annual publication of the list would not be that helpful to employers and recommends amending the bill to require using "a web-based technology that provides for an easily searchable database to be used by employers, brokers and others."

Betsy Ryan, chief executive of the New Jersey Hospital Association, said: "In general, we fully appreciate the calls for greater transparency to protect patients from surprise medical bills. As a health care community, we can and should do more in that area, and we want to work with the sponsors and other stakeholders to see that through. But there are so many other complex issues in this bill that we do not support it in its current form.

"The breadth of this bill is very wide; it not only addresses specific out-of-network issues, but also imposes a great deal of added regulations on all licensed health care facilities and licensed health care professionals. Because of its wide reach, we’re worried about unintended consequences of the bill — for example, the potential that needed health care services could be delayed by all the notification requirements on hospitals, or that payment limits would drive some medical professionals out of the market."

Ryan said: "This bill is far too complex — and the ramifications much too important — for us to push this through in a month’s time. We’re asking the sponsors to allow enough time that stakeholders can work with them to thoroughly examine this proposal, and refine it where needed, to make sure we get it right.”


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