When Middletown resident Bob Ensor got smacked in the face by the boom of a dry-docked sailboat while he was doing volunteer work at a local boat club — suffering a broken nose and eye socket — he was quickly transported to a local hospital for emergency surgery. The facility was in-network, so Ensor thought his insurance would cover almost all of the expenses, including the tab for a plastic surgeon and an assistant plastic surgeon. But even as he recovered after getting slammed by the boom, he was slammed again to discover that his insurance company declined to cover more than $160,000 in surgeons’ bills, because those doctors were out-of-network, even though they performed the procedures at an in-network hospital. Ensor said he was shell-shocked, until the boat club ultimately agreed to settle his out-of-pocket tab.
Preventing so-called “surprise medical bills” like that were behind a legislative bill — The Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act — that Gov. Phil Murphy signed into law on June 1, 2018. At the federal level, Congress is also considering several solutions.
Among the state law’s provisions, which became effective 90 days after Murphy’s signature, was one that says patients who receive “inadvertent out-of-network services” may not be billed for costs that exceed his or her deductible, copayment, or coinsurance; although the patient’s carrier may be billed for such costs, according to Nicole DiMaria, a member of the Health Care and Hospital Group at the law firm Chiesa Shahinian & Giantomasi PC. Noncompliance with this and other provisions may result in monetary penalties.
A quick ‘cure’
“Whether the law is good or bad depends on who you are,” said DiMaria. “It’s good for patients [“I wish this law was in effect when I had my accident,” Ensor told NJBIZ], but it was a tumultuous rollout for hospitals, physicians and other providers. It was a very aggressive timeline, with only about three months between the governor’s signature and implementation, and to date — about a year after it was signed into law — we still have no formal regulations from the state Department of Banking and Insurance, the New Jersey Department of Health, the state Board of Medical Examiners or other agencies. So far there’s just some informal guidance, and a lot of questions.”
DiMaria’s health care clients — mainly hospitals, physicians, chiropractors, physical therapists, and consulting groups — are making “good faith compliance efforts, but the feeling is that this law gives insurers too much leverage to reduce their reimbursement rates,” she said. “We need formal regulation from the responsible agencies.”
In the meantime, she’s trying to help clients take steps to meet some of the many provisions, including drafting forms to be signed by patients acknowledging that the facility has advised them if they’re out of network — and how this may impact their financial responsibility — “and I’m also helping clients to develop policies and procedures around patient intake.”
Not a simple solution
There’s still a lot of administrative work, she noted, because the law requires health care providers to do some detective work and ascertain just which radiologists and other specialists, for example, are in- or out-of-network. “It requires a lot of communication and coordination,” she said. “There’s a lot of discussion going on.”
The situation gets even stickier when it comes to surprise billing and self-funded health care plans, she added. “The New Jersey law has an opt-in provision for self-funded plans [where an employer basically pays for claims using its own funds], which generally are not regulated by the state,” DiMaria said. “Self-funded plans are generally regulated by ERISA [the federal Employee Retirement Income Security Act of 1974], so we don’t know if the state’s opt-in provision is even legal. This can be pretty important, since a sizable chunk of plans are self-funded.”
The lack of formal agency guidance has resulted in a host of questions, said John D. Fanburg, managing member of Brach Eichler LLC, and chair of the firm’s Health Law practice. One revolves around certain disclosures that must now be posted on a health care provider’s website. “Does this mean that every medical practice needs to have a website?” he asked. “I think they should, so they have more control over their social media, but in the meantime many don’t have one. Also, it appears they’re supposed to post the prices of procedures on their website — but that’s tricky because the final charge that the patient will pay could vary, depending on their insurance coverage. I’ve advised clients that in the absence of formal guidance, they might want to consider posting a phone number on their website so patients can speak with someone for this kind of detailed information.”
Solo physicians and small practice groups in particular are having trouble getting a handle on the new requirements, “because they don’t have extensive, in-house support,” said Khaled J. Klele, a partner in Riker Danzig’s Health Care and Commercial Litigation Groups. “For example, based on the name of the act, many smaller groups think it only applies to out-of-network activity, but in fact they need to make appropriate disclosures even if the physicians are in-network. It would be helpful if we had specific regulations.”
He also cited the “tough dispute arbitration provision in the act, which has already resulted in some lengthy backlogs.”