The New Jersey Society of Plastic Surgeons and the American Society of Plastic Surgeons request your opposition of S-1285, which is scheduled for a Senate vote on Thursday, June 29, 2017. Together with our organizations represent more than 220 physicians in New Jersey.
Following the passage of the Affordable Care Act, insurers have created products with narrow, inadequate, and non-transparent physician networks. These “narrow networks” often force patients “out-of-network” for needed care. When patients receive care from a provider they did not know was outside their network, they are surprised after the fact that their insurance will not adequately cover that service even when they are paying substantial premiums for that benefit. We appreciate your effort to address surprise billing and
thank you for continuing to work with the medical community to better protect patients and physicians.
It should first be noted that there are existing patient protections in place for state-regulated plans that make passage of S-1285 redundant. Existing protections limit a patient’s financial exposure to in-network obligations when receiving out-of-network care in emergencies. Further, New Jersey already has a dispute resolution process in place for disputed out-of-network services. This process uses the nationally recognized consumer-friendly, Fair Health, Inc. database to determine the resolution and holds patients
harmless. Those structures are applied as far as they are legally allowed to be applied, but S-1285 seeks to expand beyond what is legally permissible. The state is only permitted to regulate state-regulated plans.
Ultimately, S-1285’s arbitration and transparency/disclosure sections will NOT apply to over 70% of patients enrolled in self-insured products in New Jersey.
Our primary concern centers on the provisions for settling disputes between carriers and payers in cases where out-of-network care is provided inadvertently or in an emergency. ASPS opposes arbitration, a costly and burdensome solution to billing disputes. Instead, the legislature should utilize an independent third-party claims data repository, such as FAIR Health, Inc., described below, as the basis for determining appropriate reimbursement.
When arbitration is used, or when a fee schedule is set for resolving disputes, tying reimbursement decisions to Medicare rates and contracted insurance rates is inappropriate because:
Medicare rates are notoriously low, to the degree that rates at 250% of Medicare are still typically below what would be considered usual and customary for reconstructive procedures covered by private carries.
including insurer contracted in-network rates in arbitration decisions tips the scales in favor of insurance companies at the expense of providers. Using this baseline as a consideration in dictating payments to non-contracted providers, S-1285 inadvertently makes providers de facto network participants without offering them the patient access advantages that come with being a contracted provider; and
considering insurer out-of-network rates in arbitration decisions is likewise problematic because it relies on the use of insurers’ data, and insurers have a storied and documented history of rate manipulation.
As an alternative, Fair Health, Inc.’s independent claims database should be utilized. Interestingly, New Jersey also uses Fair Health to set it’s personal injury protection (auto liability) reimbursement standard, PICPA dispute resolution, and for consumer assistance through the Department of Banking and Insurance.
FAIR Health, Inc. has the nation’s largest unbiased collection of privately-billed medical claims data, Medicare claims data, and geographically-organized healthcare cost information. It can provide relevant and geographically-specific cost data to providers, patients, and insurance companies, and it can help NeW Jersey avoid using opaque insurer data and exposing its citizens to potential corruption. Most importantly, it is unaffiliated with any of the parties involved in out-of-network disputes and was created using funds provided by United Healthcare and Aetna as part of a $350M legal settlement in New York. The independence of the organization was a driving factor in a recent conclusion drawn by a study conducted through the National Organization for Research at the University of Chicago (NORC), which recommended that Fair Health data be used to calculate out-of-network physician reimbursement over other methodologies and all-payer claims databases.
While utilizing FAIR Health, Inc. will provide fair reimbursement to out-of-network providers and will stop “surprise” bills, insurers must also have adequate networks in place and sufficiently communicate to patients about those networks. NJSPS and ASPS support provisions in the bill that enhance enforcement mechanisms against insurers who fail to maintain adequate networks. Additionally, we commend the legislature for including robust patient transparency and disclosure provisions. ASPS and NJSPS believe, along with the New Jersey Health Association (NJHA), health plans, physicians, and consumers that much of the surprise billing problem can be addressed by reducing confusion and fully informing patients of their potential to receive care from out-of-network providers. Payers, facilities, and providers all share responsibility for communicating network-related information to patients. S-1285 includes notification responsibilities that will help patients better understand their healthcare coverage and avoid surprise bills.
However, Senator Sarlo’s legislation (S-3299), which is in second reading in the Senate, improves upon the best parts of S-1285, because it closes an important loophole and would legally ensure that consumers insured by self-funded health plans (ERISA and TAFT-HARTLEY) are also afforded the same protections.
Thank you for your consideration of our comments opposing S-1285 and supporting S-3299. If you have any questions or need further assistance, please feel free to contact Patrick Hermes, Senior Manager of Advocacy and Government Affairs for the American Society of Plastic Surgeons at firstname.lastname@example.org or Claudine Leone, Government Affairs Counsel for the New Jersey Society of Plastic Surgeons at email@example.com.
Debra Johnson, MD
President, American Society of Plastic Surgeons
Negin Noorchashm Griffith, MD, FACS
President, New Jersey Society of Plastic Surgeons