On May 14, 2015, New Jersey lawmakers introduced a proposed landmark bill that, if passed, will represent a major overhaul of out-of-network medical care charges, current billing practices, and have a significant impact on hospitals and urgent care centers providing services on an out-of-network basis. Dubbed protection for consumers against surprise medical bills and a way to control rising medical costs, The Out-of Network Consumer Protection, Transparency, Cost Containment and Accountability Act (A4444) comes after a decade of debate and failed efforts to curb out-of-network medical costs in the State, and is part of a rising national trend to do the same. Sponsors of the Act believe that this will create transparency and cap out-of-network charges which are generally understood to add to the costs throughout the system. Providers believe that the Act will force them to agree to fees that they may find unreasonable and will slant the playing field towards managed care providers. Key features of the Act include:
* Healthcare facilities and their physicians will be prohibited from billing a patient for out-of-network urgent care or emergency care in amounts that are greater than the patient’s insurance plan would allow for in-network services;
* Healthcare facilities and physicians will be required to give patients a statement that identifies the medical professionals providing the care, whether they are in network or not, and how much the procedure costs, at least 30 days prior to an elective procedure;
* Under the new bill, patients would not incur any out-of-pocket costs beyond what he would have paid in-network unless he “knowingly, voluntarily, and specifically selected an out-of-network provider.”
* The Department of Banking and Insurance will be authorized to designate an organization to gather and analyze healthcare cost data and create a health-price index for any given urgent or emergency care service;
* Healthcare facilities will be prohibited from billing an out-of-network patient’s insurance carrier for amounts exceeding 2.5 times the median price established by a health-price index for any given out-of-network procedure;
* Insurance companies and healthcare facilities will have the option of entering binding arbitration when they cannot agree on out-of-network costs;
* At least every 20 days, insurance carriers must publish an updated list of out-of-network providers.
* Penalties for hospitals and other healthcare providers ranging from $1,000 to $25,000 per occurrence for failure to comply with the Act.
A4444 is still in its infancy stages with the first Stakeholders’ meeting having taken place on May 22, 2015; lawmakers took comments from physicians’ groups, hospitals, consumer advocates, and other industry leaders, leading to a statement by the head of the committee overseeing health insurance that changes to the initial proposed bill would be made, though there is no indication as to the type of changes that will be made moving forward. Hospitals and healthcare facilities are advised to keep abreast of the legislative situation, and engage in the process as much as possible, because as written, A4444 has the greatest impact on healthcare providers. While leaders in the healthcare industry have offered mixed reactions to the proposed bill, healthcare providers are of the general consensus that A4444, as is, represents a gift to managed care entities that will have deleterious effects on the finances of hospitals and other healthcare facilities, and on their ability to negotiate with managed care entities.
In response to mounting concerns about the impact of A4444 and the perceived slant in favor of managed care entities, CarePoint Health recently proposed an alternative form of payment reform with the goal of finding a solution that can sustain the current health care system and provide equitable reimbursement for patients regardless of insurance status. In addition, The Medical Society of New Jersey has taken the physician-based position that all that is necessary to create valuable reform is to pay physicians fairly and provide fair contract terms that will encourage physicians to join networks, thereby dissipating the out-of-network issue.
Hospitals are advised to consider all of the potential impacts A4444 will have, and take a proactive approach to proposing alternative ideas for lawmakers to consider in shaping a bill that will be fair for insurance carriers and providers alike.