Independent physicians and insurers are sorting out the ramifications of a recently passed law covering out-of-network health care, and attorneys statewide expect to be quite busy in the coming weeks and months.
The law requires hospitals to disclose upfront to surgery patients any out-of-network providers to be involved in their treatment and what their fees will be. It also allows for state-regulated binding arbitration between patients and providers to settle costs of out-of-network bills.
There are an estimated 6,000 physicians expected to be affected by out-of-network disclosure requirements to be set by the state Department of Banking and Insurance.
“As the law is currently written, the arbitrator will have the ability to choose either the final amount offered by the insurance company or the final amount requested by the physician,” said Lana Ros, a health care attorney at Norris McLaughlin & Marcus.
“There does not appear to be an ability for the arbitrator to choose an amount they believe to be a reasonable compromise between the two amounts,” Ros said. “As such, doctors may not be proficient in choosing a value for their services that will be more readily accepted by an arbitrator. As this law goes into effect, there will be a learning curve until a range of acceptable amounts for specific services is recognized.”
John Fanburg, chair of the health care practice at Brach Eichler, is concerned that the binding arbitration process will have a negative impact on specialists in the state. That’s because the process will be mediated by a DOBI-appointed arbitrator who only can side with either the physician or insurance company with no ability come up with a compromised price for service.
“Insurance companies will eventually use pricing benchmarks, as the arbitration process becomes more normalized in the state,” he said.
A pricing benchmark allows insurance companies to base their reimbursement offers for medical procedures on composite costs of the same procedures nationwide.
Fanburg also outlined the arduous process doctors will have to go through to settle a pricing dispute with insurance companies.
“Generally speaking, the out-of-network doctor, after they go through all of the fees or disclosures and letting the patients know what their obligations are, they submit the bill, and if the patient has out-of-network benefits, depending upon their insurance plan, then the insurance company may be unwilling to pay the amount of the bill that the doctor submitted,” he said. “If the two sides can’t agree on a price, then they go to this binding arbitration. Then what happens then is that the doctor says, ‘Based upon my experience with the patient and my training I think $1,500 is right.’ The insurance company may say they only feel $500 is right.”
He emphasized the health care community agrees with the transparency portion of the new law, but said that it is awaiting DOBI guidelines on disclosure.
Larry Downs, president of the Medical Society of New Jersey and an attorney, said the group is preparing its 5,000 members to handle the new law, and that out-of-network doctors might leave the state or opt to join a large health care system and thus, give up their independence.
“We’re going to help our members put together what they need in an arbitration setting,” Downs said. “We don’t know a lot about what the new arbitration system is going to look like, but we assume it will look like the current arbitration system run by DOBI. But there are also some other elements of the law that have to be dealt with as well in terms of disclosures and fees, so we’re going to help doctors understand what their requirements are [and] help them make sure that they do well in arbitration.”
“Generally, I think there’s a lot of federal and state policy in health care,” he added. “Some of the macro requirements have put such a burden on practices that it’s impossible for midsized practices to keep up with that administrative burden. The whole system is slanted towards larger health systems.”
Dr. Peter DeNoble, an orthopedic surgeon by trade and president of the New Jersey Doctor-Patient Alliance, said his group is preparing a seminar for its 300 physician members who are out-of-network.
“I’m on the front lines and I see others who are rightfully anxious about the uncertainty of this law,” DeNoble said. “We are actually introducing a lot of doctors in the state to our practice enhancement seminar on June 11. The goal is to empower independent doctors to navigate these new regulations to try to maintain solvency.”
“We are going to give them access to the tools that will let them engage in fair reimbursement,” he added. “We need to do what’s best for the doctors so that we can maintain that access to care that we are providing.”
Ward Sanders, president of the New Jersey Association of Health Plans that represents insurance companies in the state, said this arbitration process is meant to encourage doctors and insurance companies to compromise on a fair price before meeting at the table.
“The only doctors who will be adversely impacted by this bill are the outliers who have abused the health care system, relied on egregious charges and saddled patients with surprise bills,” he said in an email. “The sponsors recognized that this style of arbitration is the most efficient way to protect a consumer by simultaneously driving providers and payers to a fair price by disregarding outlier requests of either provider or payer in their entirety.”