N.J. lawmakers seek to rein in soaring out-of-network health care costs
The stories of hospital sticker shock are now legend: the $9,000 bill to bandage a patient's finger, and the patient who thought by going to an in-network hospital she was covered, only to receive a five-figure bill from the anesthesiologist who did not accept her insurance.
Acting to rein in business practices insurance companies say lead to more than $1 billion in excessive health care costs every year, a group of state lawmakers Thursday introduced a long-awaited bill that limits how much out-of-network hospitals and doctors can charge for their services in New Jersey.
The bill also would create a binding arbitration process, allowing an independent expert to decide billing disputes between health care providers and insurance carriers.
"You can't expect a patient who's lying in a hospital bed awaiting surgery to look up and ask if their anesthesiologist is in their network," state Sen. Joseph Vitale (D-Middlesex), the prime sponsor of the measure, said at a news conference at the Statehouse in Trenton on Thursday.
Federal data confirmed New Jersey is home to some of the highest-priced hospitals in the nation: Bayonne Medical Center, which charged $9,000 for the busted finger, has topped the list for the last two years. Meadowlands Hospital Medical Center in Secaucus is not far behind.
Well-intentioned New Jersey law helped contribute to the problem, insurance carriers say. Patients who go to an emergency room outside of their insurance network cannot be charged for costs that exceed their in-network insurance rates. That has left the insurance companies to absorb the rest of the tab, which has ranged from double to ten times what the procedure would fetch at an in-network hospital.
Costs are also driven up by specialists, such as radiologists and anesthesiologists, who despite working in hospitals that accept most insurance plans, they often decline to join the network, lawmakers and insurance executives say. Patients often do not know until weeks later when they receive a bill. The costs are often astronomical because out-of-network doctors can set their own prices.
Legislators have held numerous hearings on various bills over the last several years, only to be derailed by persuasive lobbyists. Vitale described this version as "fair, because it protects consumers, and all sides have skin in the game."
Doctors and hospitals "will have to rein-in billing, and insurance companies have to be realistic and not underpay for important work," Vitale said.
Sponsored by state Sens. Vitale, Nia Gill (D-Essex), state Assemblymen Gary Schaer (D-Passaic), Troy Singleton (D-Burlington), and Craig Coughlin (D-Middlesex), the bill would:
• Create of a health price index — a database of claim information by procedure that would be used for cost comparisons.
• Require physicians and hospitals to give patients 30 days prior to a procedure a statement that identifies the medical professionals providing the care, whether they are in network or not, and how much the procedure costs.
• Cap the price for procedure at 2-1/2 times the median cost based on data from the index.
• Adopt a binding arbitration process that would allow the arbiter to decide how much an insurance company will be paid.
Schaer called rising health care costs "the most important issue facing consumers." He said the bill could save consumers 14 percent in costs.
"I think it is a monumental bill in New Jersey history," he said.
Still, lawmakers and experts say the bill is likely to draw a wave of opposition from hospitals and specialists who could lose money because of the measure.
Mark Manigan, an attorney specializing in health law, said part of the reason is that the legislation cats a wider net than he expected.
"This approach seems pretty heavy-handed," said Manigan, a lawyer with Brach Eichler in Roseland. "If you think about the stories of hospitals with $4,000 aspirin, this goes way beyond that. Because it's so far-reaching, you'll get a lot of people opposing it."