The debate continues in New Jersey and New York regarding what to do about out-of-network charges and balance bills when the consumer has no opportunity to choose or shop for care. Several State Legislatures are trying to tackle this problem in order to protect the consumer from large unexpected medical bills. Another related challenge is who should take the financial burden of these bills: the insurance company – by paying out of network bills, or the medical provider – by accepting less payment.
Restarting N.J. hospital billing debate
By Lindy Washburn, The Record
Michael Young, a 24-year-old college student, thought he was going to die a year ago May when he called 911 while visiting his father in Paramus.
It turned out he had appendicitis. The ambulance took him to The Valley Hospital in Ridgewood, where a surgeon performed an emergency appendectomy.
Now Young faces a different kind of crisis: The anesthesiologist that night at The Valley Hospital is suing him for $2,200 — after his insurer paid $726.
Surprise medical bills just keep coming for patients in New Jersey, five months after the Legislature’s effort to fix the problem died. Some come from hospital-based doctors who don’t accept the same insurance plans as the hospital where they work. Others are received by patients with out-of-state or federally regulated coverage who go to out-of-network emergency rooms — New Jersey regulations that require the insurer to protect its members from balance billing in such cases don’t apply to their plans.
Young gets his coverage through a family insurance plan for retired New York City employees; it is outside the jurisdiction of New Jersey regulations.
His anesthesiologist was part of Bergen Anesthesia group, which does not participate in his insurance plan. There were no other choices when the ambulance took him to Valley because it is the sole provider of anesthesia services there.
The insurer — GHI/EmblemHealth — paid about a quarter of the $2,900 he was charged for anesthesiology for lower abdominal surgery under emergency conditions. GHI used its own fee schedule to determine what they considered appropriate; Bergen Anesthesia billed Young for the remainder.
Now Young is stuck with the charges. He has no income of his own.
Other recent examples include:
–At one hospital, the father of a 3-year-old who needed emergency stitches was surprised when the plastic surgeon billed him $2,000, on top of the $3,800 he received from the insurer. When the father took it up with a hospital executive, the executive said his options were limited because the plastic surgeon did not participate in any insurance plans. But he called the surgeon, who agreed to waive the rest of his fee after the child’s father paid $900 — his remaining deductible — toward the balance.
–Another couple chose a Bergen County hospital as their baby’s birthplace because it was in their insurer’s network. They were surprised to learn — when the bills came — that the anesthesiologist, surgeon and neonatologist at the hospital did not participate in their insurance plan. The plan, purchased through the Affordable Care Act on HealthCare.gov, provides no out-of-network coverage.
–In Hudson County, all three hospitals owned by for-profit CarePoint Health no longer participate in the network of the state’s largest insurer, Horizon Blue Cross Blue Shield of New Jersey. Hoboken University Medical Center was the last to opt out, as of Wednesday, when its contract ended. The three, including hospitals in Bayonne and Jersey City, are also out-of-network for Aetna, Cigna, Health Republic of New Jersey, Oscar Health Insurance and UnitedHealthcare. The vast majority of CarePoint’s patients enter through the facilities’ emergency rooms, which enables the hospitals to demand payment from insurers for their charges, among the highest in the nation, while leaving the patient’s obligation the same as it would have been at an in-network facility.
Ward Sanders, president of the state Association of Health Plans, condemned that business model on Thursday, when he renewed his industry’s call for legislative reforms. “New Jersey has become a hotbed for unconscionable out-of-network billing practices,” he said. “Certain facilities and providers … engage in predatory pricing, surprising consumers with unexpected bills, and creating exorbitant costs for consumers, employers and unions.”
“It’s time for the Legislature to step in,” he said.
Now that the logjam over Atlantic City has been broken, lawmakers say they are gearing up to try again on what Democrats and Republicans agree is a pocketbook issue. But recent developments affecting the state’s hospitals may make it more difficult. Legislation that could reduce hospital revenues or diminish their leverage with insurers will be seen as a problem, and lawmakers with hospitals in their districts are likely to hear about it.
Hospitals take a hit
The launch of the Omnia health plan by Horizon Blue Cross Blue Shield of New Jersey alienated half of the state’s 62 hospitals by labeling them as Tier 2, a non-preferred status expected to lead fewer patients to seek care at their facilities, and thus lower revenues. In addition, 30 non-profit hospitals face lawsuits — and the potential loss of their property-tax exemptions — after a precedent-setting state Tax Court decision and Governor Christie’s veto of legislation that would have protected them. And hospitals are fighting additional cuts in state charity care funding this year.
Nevertheless, Sen. Gerald Cardinale, a Demarest Republican and health professional himself — he’s a dentist — has begun circulating his own version of the “Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act” first introduced last year by three Assembly Democrats and the chairman of the Senate Health Committee, Sen. Joseph Vitale, D-Middlesex.
Cardinale’s version is somewhat friendlier to doctors and hospitals, because it would rely on peer review — one panel for doctors and one for hospitals — to settle disputes when insurers and out-of-network providers disagree over how much should be paid for a service. The original version relied on “baseball arbitration” — a choice of one side’s final offer — by outside professional arbitrators.
The Democratic sponsors of the measure that failed last session — Assemblyman Craig Coughlin of Middlesex, and Assemblymen Gary S. Schaer of Passaic and Troy Singleton of Burlington, along with Vitale — have met with interest groups and say they plan to meet again to see what changes might help the bill win passage. And Citizen Action, the consumer advocacy group, plans to call attention to the problem of surprise medical bills at an event in mid-June.
All aim to take the consumer out of the middle of such disputes.
And that’s a goal with which the state hospital association, which did not support the measure last year, can agree. It has suggested changes that would give hospitals a bigger role in preventing staff anesthesiologists and other hospital-based specialists from billing patients beyond their in-network financial obligation after the insurer has paid.
“I’m optimistic,” said Neil Eicher, the association’s vice president for legislative affairs. “I think the sponsors have done a great job at keeping the dialogue open.”
Law in New York
Other states have made more progress than New Jersey. In Florida, Republican Gov. Rick Scott signed bipartisan legislation in April to protect patients who inadvertently receive a bill from an out-of-network doctor when they go to an in-network facility. Consumers would pay no more than their usual cost-sharing, and disputes between insurers and out-of-network doctors would be worked out through a voluntary dispute-resolution process.
In New York, a similar law took effect a year ago that subjects disputes to a mandatory resolution process, while limiting consumer cost-sharing to what it would be if the service were provided in-network.
In the first 11 months of the New York law’s implementation, 291 complaints about emergency services were lodged with the state’s Division of Financial Services. Of the 168 resolved when the report was issued, 37 percent were in favor of the health plan, 23 percent in favor of the provider, and 25 percent reached a settlement on their own. Plastic surgeons, emergency physicians and orthopedic surgeons were the specialists most often involved in disputed bills, and only 12 of the cases resolved were over disputed charges of $5,000 or more.
New Jersey’s proposed measure would apply to both hospitals and physicians who are not in the patient’s insurance network when they provide care, either in an emergency or as a scheduled elective procedure.
In an emergency, providers would be barred from billing the patient more than the patient’s standard cost-sharing for in-network services. Binding arbitration would be required to settle disputes, and more transparency and disclosure would be required about charges and insurance-plan participation. In an elective situation, the patient would have to acknowledge that out-of-network rates apply, and be informed of what the charges are likely to be.
The measure foundered last year after intense opposition from hospitals and medical specialists, primarily represented by the Medical Society of New Jersey. Doctors said the measure would encourage insurers to underpay them, in order to force physicians to initiate costly arbitration proceedings. Many said that in-network payments from insurers were inadequate, which was why they chose to remain out-of-network.
CarePoint, the Hudson County chain, said the survival of its three facilities depended on their ability to bill insurers high rates for out-of-network care, because government programs, like Medicaid and Medicare, paid them less than the cost of services. “Being out-of-network is not a business strategy, it is a survival strategy,” Jarrod Bernstein, the system’s senior vice president, said Thursday. The introduction of new, tiered health insurance plans will further reduce “vital revenue from commercial payers that offsets the underfunding of government payers, like Medicaid and charity care,” he said.
In Michael Young’s case, Bergen Anesthesia declined to comment. Its attorney has sent him notice of a civil lawsuit in Superior Court.
Last year, the same doctors won a similar case, when a Bergen County judge ruled against a Franklin Lakes man who challenged the anesthesia group’s suit for $1,852 — the balance remaining after his insurer had paid what it considered appropriate for anesthesia during an emergency C-section birth.
“We never want to see our members in this situation,” said Tara Schuh, a spokeswoman for EmblemHealth, which administers the GHI plan. “We would ask for that provider to seek arbitration with us, and not our member.”
As to the disparity between Emblem’s payment of $726 and the bill for $2,900, Schuh said it was necessary “to keep health-care costs in line. We’re committed to providing affordable, accessible health care.”