Coughlin, Schaer & Lampitt Legislation to Combat Surprise Out-of-Network Medical Bills Clears Assembly Panel

Pro-Patient Health Care Reform Bill Advances

Bill is Among Speaker Coughlin’s Top Priorities

(TRENTON) – Major legislation sponsored by Assembly Speaker Craig Coughlin, Assemblyman Gary Schaer and Assemblywoman Pamela Lampitt to protect patients by eliminating surprise out-of-network medical bills was advanced Monday by an Assembly panel.

The bill (A-2039) – which is among Coughlin’s top priorities – is designed to help those burdened by surprise medical bills after medically necessary emergency services or inadvertent out-of-network care.

It reforms the health care delivery system in New Jersey to increase transparency in pricing for health care services, enhance consumer protections, create an arbitration system to resolve billing disputes and contain rising costs associated with out-of-network health care services.

“Far too many New Jersey families – even those with quality health benefits plans – find themselves fighting over thousands of dollars in out-of-network charges they never even had the opportunity to review – let alone agree to – before receiving medical attention,” said Coughlin (D-Middlesex). “This 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.”

“If given the choice between continuing with medical care that ultimately would lead to substantial out-of-pocket costs and considering other options that carry a lower price tag, the vast majority of reasonable New Jersey residents certainly would choose the latter, but the problem, at present, is that they don’t have that choice,” said Schaer (D-Bergen/Passaic). “By implementing these reforms, increased transparency in out-of-network services chief among them, this legislation will make health care more affordable for consumers and make the system more efficient overall.”

“This is a pro-patient legislation that will keep residents aware of out-of-network services or doctors,” said Lampitt (D-Camden/Burlington). “It is time we introduce a level of transparency to the health care industry in New Jersey to enable everyone involved to make well-informed decisions.”

The bill reforms several aspects of the state’s health care system, including:

• DISCLOSURE

The bill places responsibilities on health care facilities and health care professionals to notify patients about services that they will provide.

Specifically with regard to health care facilities, before scheduling an appointment with a covered person for a non-emergency or elective procedure, and in terms the covered person typically understands, a health care facility is required to:

• disclose whether the health care facility is in-network or out-of-network with respect to the covered person’s health benefits plan;
• advise the covered person to check with the physician arranging the facility services to determine whether that physician is in-network or out-of-network and provide information about how to determine the health plans participated in by any physician reasonably anticipated to provider services;
• advise the covered person that at a health care facility that is in-network with respect to the person’s health benefits plan that the covered person will have a financial responsibility applicable to an in-network procedure and unless the covered person has knowingly, voluntarily, and specifically selected an out-of-network provider to provide services, the covered person will not incur any out-of-pocket costs in excess of the charges applicable to an in-network procedure; and
• advise the covered person that at a health care facility that is out-of-network with respect to the covered person’s health benefits plan that certain health care services will be provided on an out-of-network basis.

In addition, in a form that is consistent with federal guidelines, a health care facility is required to establish, update, and make public through posting on the facility’s website a list of the facility’s standard charges for items and services provided by the facility.

If the network status of the facility changes as it relates to the covered person’s health benefits plan, the bill requires the facility to notify the covered person promptly.

With regard to health care professionals, the bill requires that a professional disclose to a covered persons in writing or through an internet website the health benefits plans in which the health care professional is a participating provider and the facilities with which the health care professional is affiliated before the provision of non-emergency services, and verbally or in writing, at the time of an appointment.

If a health care professional does not participate in the network of the covered person’s health benefits plan, the health care professional shall, in terms the covered person typically understands:

• inform the covered person that the professional is out-of-network and that the amount or estimated amount the health care professional will bill the covered person for the services is available upon request;
• upon receipt of a request from a covered person, disclose to the covered person in writing the amount or estimated amount that the health care professional will bill the covered person absent unforeseen medical circumstances that may arise when the health care service is provided;
• inform the covered person that the covered person will have a financial responsibility applicable to health care services provided by an out-of-network professional; and
• inform the covered person to contact the covered person’s carrier for further consultation on those costs.

A health care professional who is a physician is also required to make certain notifications concerning health care providers scheduled to perform anesthesiology, laboratory, pathology, radiology, or assistant surgeon services in connection with care to be provided in the physician’s office or whose services will be arranged by the physician and are scheduled at the time of the pre-admission, testing, registration, or admission.

The bill also places a variety of responsibilities on health insurance carriers. Specifically, a carrier must update the carrier’s website within 20 days of the addition or termination of a provider from the network or a change in a physician’s affiliation with a facility. With respect to out-of-network services, for each health benefits plan offered, a carrier is required to, consistent with state and federal law, provide a covered person with:

• a clear and understandable description of the plan’s out-of-network health care benefits, including the methodology used by the carrier to determine reimbursement for out-of-network services;
• the allowed amount the plan will reimburse under that methodology;
• examples of anticipated out-of-pocket costs for frequently billed out-of-network services;
• information in writing and through an internet website that reasonably permits a covered person or prospective covered person to calculate the anticipated out-of-pocket cost for out-of-network services in a geographical region or zip code based upon the difference between the amount the carrier will reimburse for out-of-network services and the usual and customary cost of out-of-network services;
• information in response to a covered person’s request, concerning whether a health care provider is an in-network provider;
• such other information as the commissioner determines appropriate and necessary to ensure that a covered person receives sufficient information necessary to estimate their out-of-pocket cost for an out-of-network service and make a well-informed health care decision; and
• access to a telephone hotline that shall be operated no less than 16 hours per day for consumers to call with questions about network status and out-of-pocket costs.

The bill also addresses situations in which a carrier authorizes a covered health care service to be performed by an in-network health care provider with respect to any health benefits plan, and the provider or facility status changes to out-of-network before the authorized service is performed. The bill requires the carrier to notify the covered person that the provider or facility is no longer in-network as soon as practicable. If the carrier fails to provide the notice at least 30 days prior to the authorized service being performed, the covered person’s financial responsibility shall be limited to the financial responsibility the covered person would have incurred had the provider been in-network with respect to the covered person’s health benefits plan.

• OUT-OF-NETWORK BILLING

The bill protects a covered person receiving medically necessary services at any health care facility on an emergency or urgent basis by prohibiting the provider from billing the covered person in excess of any deductible, copayment, or coinsurance amount applicable to in-network services pursuant to the covered person’s health benefits plan.

With regard to medically necessary services at an out-of-network health care facility on an emergency or urgent basis, if the carrier and facility cannot agree on a reimbursement rate for these services within 30 days after the carrier is billed for the service, the carrier or health care facility may initiate binding arbitration.

The bill also requires health care facilities that are in-network with respect to any health benefits plan to ensure that:

• all providers providing services in the facility on an emergency or urgent basis accept reimbursement rates in accordance with the bill’s provisions;
• all health care professionals that are contracted with the facility to perform services in the facility are also in-network with respect to all health benefits plans with which the facility is in-network; and
• to report certain information to the Department of Health.

The bill also provides that if a covered person receives: inadvertent out-of-network services; or medically necessary services at an in-network or out-of-network health care facility on an emergency or urgent basis, the health care professional performing those services shall:

• in the case of inadvertent out-of-network services, not bill the covered person in excess of any deductible, copayment, or coinsurance amount; and
• in the case of emergency and urgent services, not bill the covered person in excess of any deductible, copayment, or coinsurance amount.

If the carrier and the professional cannot agree on a reimbursement rate for these services within 30 days after the carrier is billed for the service, the carrier or professional may initiate binding arbitration.

• ARBITRATION

For emergency and out-of-network billing situations between providers and carriers, the bill establishes an arbitration system.

• ARBITRATION BY SELF-FUNDED PLAN MEMBER OR OUT-OF-NETWORK PROVIDER

In the case of a member of a self-funded plan that does not elect to opt-in to the arbitration and balance-billing protections of the bill, the plan member or out-of-network health care provider may initiate binding arbitration to determine payment for the services by filing a request with the department.

• INCREASED TRANSPARENCY

The bill also provides that on or before January 31 of each calendar year, the commissioner shall consult with the Department of the Treasury, the relevant professional and occupational licensing boards within the Division of Consumer Affairs in the Department of Law and Public Safety, and the Department of Health to obtain information to compile and make publicly available certain information, on the department’s website, including a list of all arbitrations filed and the award amount.

The bill provides that a carrier shall provide a written notice to each covered person of the protections provided to covered persons pursuant to the bill. The notice shall include information on how a consumer can contact the department or the appropriate regulatory agency to report and dispute an out-of-network charge. The notice shall be posted on the carrier’s website.

The bill also provides that a carrier shall calculate, as part of rate filings required to be filed under New Jersey law, the savings that result from a reduction in out-of-network claims payments pursuant to the provisions of the bill. The department is required to make that information available on the department’s website.

• PROVIDER NETWORK AUDIT

Under the bill, a carrier that offers a managed care plan is required to provide for an annual audit of its provider network by an independent private auditing firm. The audit is to be at the expense of the carrier and the carrier shall submit the audit findings to the commissioner. The commissioner will make the results of the audit available on the department’s website.

• WAIVER OF COST SHARING

The bill also provides that it is a violation of the bill’s provisions if an out-of-network health care provider, directly or indirectly related to a claim, knowingly waives, rebates, gives, pays, or offers to waive, rebate, give or pay all or part of the deductible, copayment, or coinsurance owed by a covered person pursuant to the terms of the covered person’s health benefits plan as an inducement for the covered person to seek health care services from that provider.

• PENALTIES

A person or carrier that violates any provision of the bill, or the rules and regulations adopted pursuant thereto, is liable to a penalty. Further, upon a finding that a person or carrier has failed to comply with the requirements of the bill, including the payment of a penalty, the commissioner may:

• in the case of a carrier, initiate such action as the commissioner determines appropriate;
• in the case of a health care facility, refer the matter to the Commissioner of Health for such action as the Commissioner of Health determines appropriate; or
• in the case of a health care professional, refer the matter to the appropriate professional and occupational licensing board within the Division of Consumer Affairs in the Department of Law and Public Safety for such action as that board determines appropriate.

Finally, the effective date of the bill is the 90th day following enactment.

The bill was released by the Assembly Financial Institutions and Insurance Committee.