June 21, 2017
Dear Members of the General Assembly and State Senate:
On behalf of the American Association of Orthopaedic Surgeons and the New Jersey Orthopaedic Society, we are writing to oppose S-1285/A-1952 (“Out-of-Network Consumer Protection, Transparency, Cost Containment, and Accountability Act.”). We are concerned this measure would create a complex bureaucratic and legal scheme by establishing a costly new dispute resolution system all while unlawfully attempting to regulate federal health plan payments. This legislation would disproportionately favor insurers by harming physicians’ ability to obtain fair contracts and payments.
There has been much discussion about Out-of-Network (OON) reform. We strongly believe that physicians should continue to have the ability to be Out-of-Network to address instances where insurance companies neglect to offer fair and reasonable in-network contract rates. We do support any effort to boost disclosure and transparency because we believe such action goes a long way in providing useful tools to health care consumers.
However, knowing what doctor and which hospital is in or out-of-network sheds light on only half of the problem. Insurance carriers must also be held to a higher standard of transparency and disclosure so health care consumers can better understand the insurance product they are paying for as well as what their plan covers and does not cover. We also strongly believe it is essential that hospitals, doctors, and insurance companies all be required to provide greater transparency and disclosure to offer greater healthcare consumer protections.
Some health insurance companies argue that physicians and hospitals charge what they consider high outlier rates, even for life-saving, complicated medical care. Should consumers have any concerns about charges, they can look to the New Jersey Program for Independent Claims Payment Arbitration. This is a program established by the Health Claims Authorization, Processing and Payment Act (HCAPPA) in the Department of Banking and Insurance. As of November 2016, this program continues to settle disputes between insurance carriers and providers. As such, insurance companies no longer have to pay outlier charges.
In addition, for emergencies, patients are held harmless. New Jersey already has a “hold harmless” regulation that protects patients in State-chartered health plans, including the State Health Benefits Plan.
The regulation is as follows (condensed):
That a covered person’s liability for services rendered during a hospitalization in a network hospital, including, but not limited to, anesthesia and radiology, where the admitting physician is a network or out-of-network provider, and the covered person and/or provider has complied with all required preauthorization or notice requirements, shall be limited to the copayment, deductible and/or coinsurance applicable to network services. N.J.A.C. 11:22-5.8
New Jersey laws do not regulate the majority of the health insurance products offered here. It is important to note that New Jersey law does not apply to federally-regulated plans, like those offered by businesses or unions. The U.S. Supreme Court recently ruled that states cannot have “differing, or even parallel, regulations” for federal health plans regulations. New Jersey’s hold harmless and dispute resolution programs cannot be extended to federally-regulated plans, even if one party volunteers or “opt-in.” Employers and unions should choose fully funded, state-regulated plans if they wish to better protect their employees or members from payment gaps.
Should the Legislature wish to continue seeking a legislative fix for OON, it should look no further than S-3299 which focuses on providing consumers with the resource of transparency and disclosure all the while not duplicating the State’s existing dispute resolution process. S-3299 passed the Senate Budget and Appropriations Committee unanimously in June 2017. We urge your support of that measure to achieve appropriate OON reform.
Thank you for your attention to this matter. Please oppose S-1285 (Vitale) and support S-3299 (Sarlo).
William J. Maloney, M.D.
President, American Association of Orthopaedic Surgeons
Ronald M. Selby, MD