Out-of-network bill passes both houses, heads to Murphy

Medical and health insurance claim form with stethoscope on clipboard

Protections for some patients who get slammed with surprise out-of-network bills for interacting, unintentionally, with out-of-network providers, is close to the finish line in New Jersey.

After eight years, the bill passed both the Assembly and Senate on Thursday.

The bill, if signed by Gov. Phil Murphy, would mandate that consumers do their homework on their procedures and ensure they aren’t intentionally interacting with an out-of-network provider or facility.

If they do, the bill holds consumers harmless and allows for an arbitration process that would choose either the amount the doctor or insurer offers.

This would mirror an existing process in the state used for emergency situations, and would utilize the existing third-party arbitrator.

The arbitration issue was a sticking point in the recent debates over the bill, with providers saying the baseball-style arbitration would take away the leverage power of doctors to negotiate rates with insurers.

Providers favored the FAIR Health database, while insurers originally backed a percentage of Medicare.

The bill is also limited in its scope.

It affects fully insured health plans, which include a small portion of the state, since more than 70 percent of health insurance coverage comes from self-funded plans — which are governed by federal rules.

The bill allows for self-funded plans to opt into the state-regulated system to settle bill disputes.

This point was brought up by Sen. Nia Gill (D-Montclair), who opposed the bill.

“We understand ERISA compromises 70 percent of the market. And, although the bill says that ERISA — that is, the self-insured — may, if they would like, join this arbitration process, you cannot mandate it because they are under federal government rules. So, although it says the intent is to deliver some kind of balanced approach, we leave out 70 percent of the market,” Gill said.

“It is further my understanding that within that 70 percent, that is where a majority of the surprise bills … will continue to be able to be charged. So, we are not really able to do what we’re representing that we are going to do in this bill.”

In addition, an attorney who represents providers, Eric Katz, testified in November 2015 and reiterated to ROI-NJ on Thursday that the opt-in option opens the state up to potential litigation.

“One of significant issues … is whether the provisions of the legislation enabling self-funded plans to opt-in to the law, in the arbitration provision to resolve claims, whether or not it’s a violation of ERISA,” Katz, an attorney with Mazie Slater Katz & Freeman, said. “Certainly, on behalf of my clients — health care providers — I would consider litigation if, in fact, legislation is enacted with these opt-in provisions.”

Providers have long opposed the bill in its current form, except for the New Jersey Hospital Association, which recently came out in favor.

President and CEO Cathleen Bennett thanked legislators for passing the bill Thursday.

“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. “The out-of-network bill approved today by the Senate and Assembly is eight years in the making, and in the end it addresses our two key priorities: protecting patients from surprise medical bills, and ensuring that hospitals and physicians are on a level playing field with insurance companies when it comes to negotiating fair payments for the care they deliver.”

The business industry was also in favor of the out-of-network bill.

“This is an extremely difficult and complicated issue, and we commend the bill sponsors for their hard work to make sure all stakeholders’ interests were considered,” said Mary Beaumont, New Jersey Business & Industry Association’s vice president of health affairs. “This bill changes how out-of-network medical services are billed in a way that’s fair to both health care consumers and providers. We thank the sponsors for this bill, which strikes a fair balance between providing reasonable compensation to facility-based providers while protecting consumers.”

Beaumont added that the surprise bills drive insurance premiums higher, to an average of $22,000 for family coverage annually.

“Out-of-network costs play an increasingly significant role in the rising cost of health care for both large and small employers in New Jersey, triggering both higher premiums and out-of- pocket expenses,” Beaumont said. “Some employers fear that their next health benefits renewal will force them to drop coverage because the rate increase will be more than they can cope with.”

The Assembly easily passed the bill, sponsored by Speaker Craig Coughlin (D-Woodbridge), while the Senate bill, sponsored by Sen. Joe Vitale (D-Woodbridge), faced competition from a bill sponsored by Sen. Paul Sarlo (D-Wood-Ridge).

The Medical Society of New Jersey said in a statement Thursday that the long-lasting impacts of the bill will soon be felt.

“Our greatest concern, which went unanswered in this legislation, is its impact on the future of our healthcare system. This legislation will add to an already difficult practice environment for physicians,” MSNJ president Christopher Gribbin said. “If out-of-network physicians are unable to charge and collect market-based fees, New Jersey will suffer.  We anticipate that many physicians will leave the state since New Jersey physicians are already among the lowest paid in the nation. New Jersey will need to make significant improvements if it wishes to compete with other states for the best and brightest in medicine.”

Vitale dismissed doomsday rhetoric from the provider community — specifically the threat of doctors leaving the state — and said he had been looking forward to the passage of the bill for the past year.

“For the past year, I’ve been saying we are almost there, maybe this voting session,” he said. “This is a 10-year project. This journey from the very beginning … provides consumers with protection from balance billing.”

The bill now heads to the governor’s desk.