Legislators and stakeholders agree greater transparency about health plans is needed, but no one agrees on how to avoid the surprise bills that come from out-of-network providers.
An arbitration process built into the current version of out-of-network legislation would be “devastating” and “drive physicians out of the state,” according to testimony at a three-and-a-half-hour hearing Monday in Trenton.
Nevertheless, the Assembly Finance and Insurance Committee passed the out-of-network bill, A1952, with some last-minute amendments.
The dispute system to resolve problematic insurance claims, which can result in astronomical medical bills, would involve arbitration, where an amount ranging from 90 percent to 200 percent of Medicare would be settled upon.
This is different from previous versions of the bill that allowed both providers and insurers to offer an amount, and an arbitrator to choose which would be the appropriate amount.
Other options that were floated during testimony were a third-party or a peer-review system.
Mishael Azam, representing the Medical Society of New Jersey, said Medicare was not an appropriate baseline.
She said Medicare was a “moving target, and federal law is changing as we speak … into bundled payments and value payments.”
In addition, what percent of the population would be affected by the bill — geared towards elective procedures — varies by stakeholder.
“For those state residents that have plans that are regulated by state law, they are already protected,” Azam said.
Currently, if patients go in for an elective or emergency procedure, they may encounter facilities, physicians or specialists who are not in-network with their health insurer.
The bill has jokingly been called the “ologists” bill, according to legislators, signifying which sub-group of providers it mostly affects.
Sometimes, patients will know which specialist they are seeing ahead of time and can inquire about in-network coverage, but other times, the situation arises when the patient is already in the door, or on the way into the operating room.
This results in a balance not covered by the insurance company, which is then passed on to the consumer.
But, in the case of an emergency procedure, state law dictates that the billing must reflect in-network rates.
State law also dictates that this applies to those health plans regulated by the state. New Jersey has a unique situation of being largely self-funded — which means a large number of plans would not be affected by this rule.
This rule only applies to the less than 20 percent of the state’s population with health plans that are regulated by the state Department of Banking and Insurance, according to both Azam and New Jersey Association of Health Plans President Ward Sanders.
Assemblyman Craig Coughlin (D-Woodbridge), the committee chair and a primary sponsor of the bill, said he was aware of the limitations of the bill, but there was nothing he could do about it.
One of Horizon Blue Cross Blue Shield of New Jersey’s plans that falls under the unregulated definition and is part of the State Health Benefits Plan was brought up during the hearing.
In response, Horizon said: “Surprise medical bills and price-gouging from out-of-network providers drive up the cost of health care for everyone. Horizon, and by extension our members, paid out-of-network providers more than $1.5 billion in 2015.
“Given that Horizon has the largest network of any provider and covers just under half the residents, doubling that number provides a reasonable estimate of what out-of-network providers charged all New Jerseyans in 2015. The roughly 80 percent of New Jersey physicians and 92 percent of hospitals that participate in Horizon’s network are not the problem. The problem is the relatively small, but very expensive, group of providers choosing to remain out-of-network in order to exploit loopholes in the law and charge outrageous prices to patients who, very often, have no role in choosing that provider and no recourse once a bill arrives.”
The bill, which had not seen any movement since late last fall, has resurfaced as a potential solution to the expected shortfall in health funding by the state next year, officials at the hearing said.
But Azam said the current version of the bill would not accomplish that.
“Both the ‘baseball’ and Medicaid caps (as arbitration blueprints) are both meant to scare doctors into charging less up front. That sounds great on paper, that it’s reducing costs for everybody, but in fact, the costs are still there,” Azam said. “It just reduces payments and drives physicians out of the state.”
Her statement was echoed by other lobbyists representing the “ologists,” as well as Sanders, who cited the effect of the emergency protection law as proof.
The abuse of the emergency law proves that facilities can take advantage of the system and leaves a sort of “blank check” system in place, Sanders said.
One example cited among providers during the hearing is the current outlier, CarePoint Health, which has been in the news as being one of the highest-priced hospitals in the state.
CarePoint is currently in network with AmeriHealth and MagnaCare, but not with other major insurers, including Aetna, CIGNA, Oxford, Qualcare, Horizon and United Healthcare. CarePoint’s out-of-network status means the patients it sees in the emergency room are held to an in-network payment standard, but elective procedures can cost tens of thousands of dollars.
“We have provided substantive comments to the Senate and the Assembly over the last year on how to address the issue of price transparency and reimbursement across the state through direct feedback, public testimony as well through the various provider associations where we offered an alternative solution to the bill sponsors. The bill as currently drafted has become more draconian, further risking community health care across the state,” CarePoint said in a statement.
Opposing the blank check fear, provider representatives said instead that health plans would no longer be motivated to engage in contract negotiations to begin with.
Currently, providers create contracts with the insurers to pay a set amount.
If the arbitration process is based on Medicare, which historically pays less than 80 percent of the actual cost of care, the hospitals and physicians will lose money, according to several statements.
“If the plans know they will only have to pay 200 percent of Medicare, why — other than meeting network adequacy — would they even negotiate in-network contracts with physician practices once this bill became law?” asked AJ Sabbath, who represents a coalition of specialist groups as well as MSNJ.
This will be devastating, and could force hospitals to reduce the types of services they provide if they are being reimbursed at lower rates, according to the New Jersey Hospital Association.
The hospital and physician groups also allege the bill doesn’t go far enough to protect the consumer, as was originally intended, and should be crafted to exclude the consumer altogether, leaving the fight solely between providers and insurers.
Sanders opposed this idea.
“The consumer can never really insulate themselves from this because they are the payers. We pay through taxes for the State Health Benefits Program, most employees pay contributions towards the cost of coverage, they have cost sharing,” Sanders said. “There is a big movement in health care to have better patient engagement. Whether it’s around the provision of care or understanding of benefits. You can’t insulate a consumer — you should be able to set something around fair pricing. This is a huge financial impact. This is not a battle about insurance companies versus providers, it’s about fair pricing for consumers for the services they are receiving.”
Though the bill passed out of the committee, there is little time left between now and the end of the session. There is a fear among the stakeholders that oppose parts of the bill that it could simply pass as a Senate budget appropriation bill instead, which Coughlin said is possible.