Pushback came from many sides Thursday as Democratic lawmakers in Trenton unveiled a plan to corral high out-of-network charges and protect consumers from surprise medical bills when they go to the hospital.
A chain of Hudson County hospitals called the bill “a massive gift to large insurance companies.” The state medical society said it would have “a dangerous and deleterious effect on health care quality in New Jersey.” It labeled a provision that would have an arbitrator settle billing disputes “an insult.”
Hundreds of millions of dollars is at stake as the measure seeks to limit the amount hospitals and doctors can charge for their services. The measure calls for full written disclosure of expected charges for hospital patients and creation of a database to set the limits on what out-of-network providers can charge insurance companies. It would prevent patients from being charged more than the in-network rate for any service when they chose an in-network hospital and doctor for their care.
The savings — to patients, insurers, and those who pay for insurance coverage, including state and local governments and school systems — could be enormous. Opponents, however, say it could drive hospitals and doctors out of business.
Speaking at a State House news conference where the bill was introduced, Assemblyman Gary S. Schaer, D-Passaic, cited studies that estimated similar efforts would save 14 percent of health care costs.
“I don’t know if we’ll attain 14 percent,” he said, “but I do know we will attain something in terms of the most critical issue currently facing consumers: spiraling costs of health care, without any check in sight. This bill finally provides such a check.”
The money will come from lower payments to hospitals and doctors, and their advocates are digging into the details to prepare their positions.
“I worry we’re going to get bogged down in those wonky lobbying discussions and lose the focus on the important thing,” said Chuck Bell of Consumers Union, the non-profit publisher of Consumer Reports.
He was part of the effort to secure passage of similar legislation to reform out-of-network bills in New York State, a measure that took effect on March 31.
“This is a front-of-mind, hot-button consumer issue,” he said. “We need these consumer protections.”
Many patients have faced unexpected bills from out-of-network anesthesiologists, radiologists who read their X-rays, or even neonatal intensive-care physicians, as The Record reported this week. They’ve tried to play by the rules, and have chosen hospitals and surgeons and obstetricians who participate in their health plan’s network, only to be confounded by bills from professionals they didn’t know would be involved in their care.
For six years, lawmakers have attempted to resolve the issue as consumers and insurance companies have complained. The long, densely worded “Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act” was drafted by a group of Democrats that included state Sen. Joseph Vitale of Woodbridge, chairman of the Senate Health Committee; Assemblyman Craig Coughlin, also of Woodbridge, who is chairman of the committee overseeing health insurance; Assemblyman Troy Singleton of Mount Laurel; and Schaer.
Among the groups disappointed in the proposed law’s provisions was the Medical Society of New Jersey.
Unreasonable out-of-network charges from doctors, said Lawrence Downs, its CEO, are “extremely rare. Yet this bill punishes all out-of-network physicians by requiring them to be paid as if they participate in all of the numerous plans offered in the state.”
It takes away their ability to negotiate fair payment, he said. Doctors will join health networks if the insurers “pay physicians fairly and provide fair contract terms.”
The CarePoint Health hospitals in Hudson County said the measure was a gift to insurance companies. The entire payment system — including the rates paid to in-network facilities as well as out-of-network ones — should be regulated, said its spokesman, Jarrod Bernstein. With some health plans paying less than the cost of care, it is impossible for urban hospitals serving a high proportion of poor patients to survive, he said.
The New Jersey Association of Health Plans, representing the insurance industry, expressed concern about the database to be created from claims information submitted by insurance companies. “This seems a very big contraption to build,” said Ward Sanders, its president. “There may be an easier way to do this.”
The New Jersey Hospital Association noted the complexity of the issue and the need for “shared responsibility” on the part of physicians, hospitals, insurers and regulators. It’s also important to make sure patients have a choice of providers, and that negotiations with insurance companies are fair, said Betsy Ryan, its president.
Another bill that would address hospital billing has also been introduced and is currently before the Senate Commerce Committee. That legislation, by state Sen. Paul Sarlo, D-Wood-Ridge, chairman of the Senate Budget Committee, sets a simpler standard for limiting out-of-network bills, said his chief of staff, Chris Eilert. Neither a patient nor an insurance plan could be charged more than 1½ times the Medicare reimbursement rate by out-of-network providers, under his bill.
‘Putting patients first’
Coughlin, who held three hearings last fall about billing concerns, said his legislation “is about putting patients first and defending the consumer’s right to be able to make an informed decision about how to proceed with his or her health care.”
Lawmakers invited stakeholders to discuss the bill at a meeting on May 22.
“We know there’s going to be angst,” said Schaer. But when all the interests are balanced, he said, “the group that will benefit the most is the one that we are all here for the most, and that is the consumer.”
“This is the great part about our democracy, the engagement process,” said Singleton. “We look forward to a lively and thoughtful and serious debate as we move this process forward.”