Advocates call for changes to out-of-network medical billing at Trenton hearing

Health care stakeholders testified Thursday during a second hearing in Trenton on the contentious issue of unusually high “out-of-network” medical bills that can perform major surgery on a consumer’s wallet.Health care providers, including hospitals and physicians, argue that inadequate reimbursement by government and commercial payers is a big reason some providers refuse to negotiate lower rates as the price of joining a network.

On the other side of the issue, payers and consumer advocates contend high out-of-network charges are a burden to individuals and families, who increasingly are enrolling in health insurance plans that require them to pay a larger share of their medical bills.

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The Assembly Financial Institutions and Insurance Committee hearing was convened by Assemblyman Craig J. Coughlin (D-Woodbridge), chair of the committee. Thursday’s hearing and Coughlin’s initial hearing Oct. 2 were designed to gather stakeholder input for a possible legislative remedy to the out-of-network issue.

Jack Sullivan of the New Jersey Carpenters Health Fund, a self-insured health plan for the state’s carpenters union, called on the legislature to devise a reasonable fee schedule to determine how much out-of-network providers can charge patients.

He said that, when patients get care outside the insurer’s network, the reimbursement may be based on the provider’s “usual and customary” fee. He said the databases that generate usual and customary fees can be inflated, with the result that the insurer may wind up paying the out-of-network provider more than what it pays its in-network providers. And that, Sullivan said, gives providers an incentive to remain out-of-network.

“We absolutely need some type of fee schedule or arbitration or mediation process,” to address the issue, he said.

Renée Steinhagen, executive director of New Jersey Appleseed Public Interest Law Center, suggested that Trenton consider a New York state law addressing out-of-network medical bills that goes into effect April 1, 2015.

Steinhagen said New York’s “Limiting Surprise Out-of-Network Medical Bills” law seeks to hold consumers blameless for surprise bills for true emergency room care or other out-of-network charges that were outside of their control. She said the law uses the process known as a “baseball arbitration” in which providers and insurers negotiate over coverage disputes, so consumers are not left in the middle with a bill. “This mechanism is set up with the intent to move charges to the middle rather than the extremes.”

And she said the New York law allows consumers to go out of network when their plan’s provider network does not have a specialist who meets their medical needs. “The adequacy of provider networks, and the issue of phantom networks (providers that are listed but are no longer participating or are unavailable) is a real problem in New Jersey, and must also be addressed.”

Out-of-network has become a larger issue as for-profit health care systems have come into the state and acquired hospitals, according to Jean Pierce, a member of the public policy staff of the Health Professionals and Allied Employees.

She said several hospitals in Hudson County pursue an out-of-network business model. At the committee’s first hearing, Dennis Kelly, chief executive of CarePoint Health, which operates three Hudson County hospitals, said that, while his hospitals have high out-of-network prices, those bills are typically negotiated downward with insurers.

Pierce said: “In the long run, financial transparency is critical to ensure consumer protections. Hospitals should be required to publicly disclose their financial documents, as not-for-profits are required to do; and, in addition, should establish an all-payer claims database, which would be developed and maintained by the state.”

She said hospitals and other health care providers “should be required to disclose to patients whether they are in or out of network, what charges the patient may incur during their care and whether they have the ability to choose another provider who is in network.”

She said greater oversight is needed to protect the financial security of patients and the long-term viability of the health care system.

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“The goal of the Affordable Care Act was to increase the number of patients with insurance coverage, while setting parameters for health care facilities to improve the quality of care. Yet, if the current situation continues, any advances in expanding coverage may be for naught if an increasing number of providers choose and prefer to remain out of network.”

Maura Collinsgru of New Jersey Citizen Action Citizen said her organization has asked the state Department of Health to require as a condition for the sale of a New Jersey hospital that the buyer must keep the hospital in the insurance networks. She said the department had not imposed that condition.

One reason why legislation is needed, Collinsgru said, is that hospitals may move out of network following their acquisition by a for-profit healthcare firm.

“We would suggest a requirement for the provider to disclose to the consumer whether they are in or out of network and an estimate of the charges be disclosed.”

But she said disclosure of network and pricing information is not enough: “We need a system that avoids out-of-network charges in the first place.”

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