There’s the case of the out-of-network cardiologist who performed a pulmonary stress test on a patient, then billed Horizon Blue Cross Blue Shield of New Jersey $12,500.

For a procedure that typically costs the insurer about $90.

And then there’s the pain management physician who did a simple blood draw, sending a bill for $650 when it usually costs Horizon about $4.

They might sound too outrageous to actually be true, but as Robert Marino will tell you, the cases are very real. And they’re among the most egregious examples the Horizon CEO points to when he talks about abuses by out-of-network providers.

It’s just one small wrinkle in the debate between insurers and out-of-network providers — one that’s driven by a small slice of out-of-network doctors in emergency situations. But it’s an issue that Marino said costs Horizon and the industry hundreds of millions of dollars a year, driving up premiums in a sector where reining in costs is a national concern.

That’s why Marino said he isn’t looking to “paint the entire medical profession with this brush … because it’s not fair, and we respect the right of a physician to go out of network and we respect the right of a member to choose the doctor that they want to see.”

Rather, he’s hoping to shine a light on a select few who are gouging the system, he said.

“The vast majority that are both in- and out-of-network are really dedicated professionals, they want to do the right thing for the patient and most of their charges are reasonable,” Marino said in a recent editorial board meeting with NJBIZ. “So we’re talking about a small number of out-of-network physicians that are really driving this problem and have really come to understand how they can capitalize on a regulation that requires us to pay out-of-network charges.”

For Horizon, the state’s largest health insurer, 80 percent of New Jersey’s 27,000 doctors are in its network. Of the 5,500 that aren’t, Horizon found about 200 of them bill certain services at 1,000 percent of what’s allowed under the Medicare fee schedule, he said.

The Newark-based insurer has identified another 2,000 doctors with charges equal to about 500 percent of what’s allowed under those same guidelines.

Marino said those charges are a major chunk of the roughly $1 billion in out-of-network costs that Horizon paid in 2013, a number that’s projected to rise to $1.2 billion in 2014. If those charges were capped at 150 percent of the Medicare fee schedule — which is what Marino feels would be fair — he estimates it would have saved some $600 million in out-of-network costs in 2013.

And that’s just for Horizon, which has a 48 percent market share in New Jersey.

So just how are those doctors able to charge so much? Stakeholders point to a 20-year-old state law that was meant as a consumer protection. The regulation says that, for someone in an emergency situation, patients who have no control over where they are treated and who treats them are protected from paying out-of-network costs.

That leaves insurers on the hook in certain scenarios, Marino said, such as when a patient visits an in-network hospital but is treated by an out-of-network specialist such as a pathologist or radiologist.

“Some — very few — have seen a business model here,” Marino said. “So if I am out-of-network with the insurance carrier, and I have an emergency situation, the insurance carrier by regulation is obligated to pay whatever I charge. And we’ve seen some egregious examples of things like that.”

Horizon’s preferred solution is a cap imposed by state legislation.

But it may not be so simple.

Other stakeholders acknowledge a small segment of “outlier” providers who charge well above the market averages, but they differ on how to address them and what would be a fair benchmark.

Larry Downs, CEO of the Medical Society of New Jersey, said, “Doctors should be paid a fair and adequate amount for their services, but for those who are collecting more than they should be, if they’re members of ours, we take action against them.”

For those who aren’t, the organization asks insurers to refer cases to them so that it can conduct a review of “what a reasonable fee for those services might be.”

“We are as interested in intervening with them as they are,” Downs said. “It’s just that we don’t believe there should be broad-based legislation that would remove what’s a really important consumer protection because there’s a handful of doctors that are doing that.”

He said a better way is a review and some type of mediation or arbitration to settle disagreements over fees. The association has reviewed dozens of cases in recent years for self-funded plans for labor unions, AmeriHealth and Cigna; such a case could be referred to the New Jersey State Board of Medical Examiners, which has regulations against overbilling.

Downs added that having a cap would “basically remove any ability for a doctor in private practice to negotiate a rate with an insurer.” What’s more, he said, “Medicare is not at all a benchmark for what physician services cost in the marketplace,” even though insurers often point to it when discussing out-of-network fees.

Finding the right benchmark is one key focus as lawmakers develop a solution geared toward transparency and disclosure in out-of-network medical care, though a cap may not be a widely supported part of that solution.

Assemblyman Troy Singleton (D-Mount Laurel), who is among the team of legislators working on the issue, said looking at existing claims data may be the best to “have a better understanding of what the market is actually bearing, and try to create some reasonableness to the process.”

“There’s a lot of ongoing conversations about how best to do that,” Singleton said. “We’re recognizing that we don’t want to compromise quality of care, but also want to make sure that payers in the system are able to understand those costs they’re getting into.”

Singleton said he’s working on the issue with Sen. Joseph Vitale (D-Woodbridge), Assemblyman Gary Schaer (D-Passaic) and Assemblyman Craig J. Coughlin (D-Woodbridge). Such proposals go back several years with the debate over reforming out-of-network costs, but have met major resistance from providers.

Mark Manigan, a health care attorney at Brach Eichler, said he believes a cap is still a tough sell, but there is a middle ground to be found in the industry.

“I think if there’s a reasonable arbitration system, combined with transparency, disclosure and defining what an out-of-network benefit is, there is the ability to build some support within the provider community,” he said.

“To date, there’s been very little support for any kind of reform like that. So I think if both sides give a little, maybe after four or five years — however long this issue has been kicking around — we can move the ball.”

Savings for all

Horizon CEO Robert Marino said capping out-of-network costs isn’t just about the bottom line for Horizon, a not-for-profit organization with a 2 percent profit margin. The savings, he said, would be passed on to policyholders.

For instance, the $600 million in savings Horizon would see could mean $350 to $375 a year for a family that pays $18,000 annually for its policy. For an individual, the savings would be $120 to $140 for a $6,000 policy.

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