Renewed Push To Tackle And Tame Out-Of-Network Medical Bills

Patient, business advocates call for ‘two-pronged approach’ that melds transparency and mechanism to resolve disputes over surprise charges.

Hoping to jump-start what they consider a comprehensive reform, a diverse group of healthcare and business advocates have called on Democratic leaders to vote this week on a long-debated bill to reduce the growing impact of out-of-network medical insurance bills.

As of Tuesday evening, the legislation had yet to be included on the list of topics the Senate Budget Committee was scheduled to address when it next meets Thursday, and Sen. Paul Sarlo (D-Bergen), the panel’s chairman, had not responded to the advocates’ request. A measure to address the issue — which Gov. Christie has targeted for $125 million in healthcare savings in his pending budget proposal — could still be added to the agenda before the June 1 meeting.

The New Jersey for Health Care coalition, a mix of healthcare advocates, labor unions, and business interests, sent a letter late last week to Sarlo urging him to post the latest version of the bill without further delay. The proposal, introduced last February and still awaiting a Senate hearing, is the product of nearly a decade of wrangling among powerful stakeholders; an Assembly committee approved a similar plan last June.

Increasing transparency

The advocates stressed that this comprehensive measure (S-1285/A-1952) — which seeks to increase transparency around network participation and pricing, and also establishes a mechanism to resolve payment disputes between medical providers and insurance companies — is the only way to truly resolve the problems caused by out-of-network, or surprise, medical bills. Sarlo expressed frustration with such a dual solution earlier this year and suggested it was time to focus on legislation to improve transparency; while healthcare providers have favored this approach, patient and business advocates insist it would be insufficient on its own.

“Transparency by itself is a great idea,” explained Mary Beaumont, vice president of government affairs for the New Jersey Business and Industry Association, a member of the healthcare coalition. “But you can’t have cost containment without the other elements of this bill.”

“We need this two-pronged approach. You can’t have one without the other,” she said. Only a handful of states have passed legislation to address the issue, and advocates said New Jersey’s approach would be the most far-reaching.

According to New Jersey for Healthcare, some 168,000 Garden State residents are billed each year for care by healthcare providers they did not realize were outside their insurance network; sometimes this treatment occurred at an in-network hospital or other facility that subcontracts with outside providers. In fact, a pair of Yale University researchers found that one in five patients who sought treatment at an in-network facility still received a bill for out-of-network care.

The $1 billion surprise

New Jersey Policy Perspective, another coalition member, found these charges add $1 billion a year to what consumer’s pay, either out of pocket or through higher premiums. These costs include tens of millions for out-of-network bills for government workers, whose healthcare is paid by taxpayers, the advocates note.

Lawmakers, led primarily by Sen. Joe Vitale and Assemblyman Craig Coughlin (both D-Middlesex), have struggled for years to craft a proposal that addressed concerns raised by advocates without alienating either medical providers or insurance companies, two powerful stakeholders often at odds on payment issues. A compromise bill poised for a vote in December was pulled at the last minute and has since been revised further.

Christie then raised the issue himself in his February budget speech, calling on the Legislature to resolve the issue so that he could include $125 million in healthcare savings for government workers in his fiscal year 2018 budget. Lawmakers must approve his $35.5 billion spending plan before July. (NJ Spotlight hosted a roundtable on out-of-network bills in late January.)

Sarlo, who is leading the budget review in the Senate, has also made clear he is eager for a solution. During recent hearings on the governor’s budget proposal, he asked treasury officials about the potential savings from any reform and questioned the Department of Health on stakeholder support for a transparency-only bill. (DOH officials declined to respond, but providers have largely favored proposals that don’t cap or set payments.)

A frustrating situation

“Quite frankly I think we’re all getting a little frustrated,” Sarlo told the DOH leaders in late April. Some healthcare providers have also warned that a more comprehensive bill could scare off physicians and other medical professionals concerned about over-regulation of the payment system.

But New Jersey for Healthcare stressed that efforts to improve disclosure and transparency — ensuring consumers are clear on what providers are included in their network and how these charges are assessed — don’t do enough to control healthcare costs. “A transparency-only bill would further exacerbate the problem and punt responsibility for a comprehensive solution to others down the road,” the group wrote to Sarlo.

While New Jersey law now protects patients against these out-of-network charges in certain cases — including for emergency care — advocates note the higher costs continue to drive up healthcare prices overall. “At some point in time these costs are paid by the health insurance company and translate into higher premiums,” NJBIA’s Beaumont said. Garden State businesses continue to rank healthcare costs as their top concern, she added, and “there’s a lot of concern that they won’t be able to continue to provide (health insurance) benefits to their employees.”

Maura Collinsgru, healthcare program director for Citizen Action and a coalition leader, said while they had not heard from Sarlo’s office by Tuesday afternoon they were working with Vitale’s staff to fine tune the bill in hopes of having it posted on Thursday, or sometime next week. “In this current environment, with all the threats coming down to the states from the federal government, it’s even more important now that New Jersey step up to the plate and resolve these out-of-network issues,” she said.

Avoiding billing disputes

In addition to improving transparency, the measure would ensure patients are not caught up in billing disputes and would map out a path to resolution for the payers and providers. Advocates prefer a version that would require parties who could not come to an agreement within a month to submit an offer to an independent arbitrator, selected by the state, who would oversee a settlement.

“This is a very balanced, strong and consumer-friendly bill,” explained Linda Schwimmer, president and CEO of the New Jersey Health Care Quality Institute, who has been working on the issue for years. She said the proposed mechanism is a “fair avenue” to address billing questions that has helped reduce the frequency of disputes when used elsewhere. “We’ve found it leads to parties resolving the issue,” Schwimmer said, instead of going through with the state-governed arbitration process.

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