NJ.com: This Reform for ‘Surprise’ Medical Bills Puts Onus on Insurance Industry

This op-ed originally appeared June 27 on nj.com

Sen. Joseph Vitale (D-Essex) has done a commendable job of highlighting the plight of New Jersey citizens who face “surprise” medical bills.

This is a devastating crisis, and it is happening every day to unsuspecting patients around the State.  According to the New Jersey Policy Perspective, 168,000 patients receive involuntary out-of-network bills every year.  This includes our police officers and teachers.  The effect on family finances can be catastrophic.

However, we respectfully disagree with the esteemed senator on how to address this problem. Up to now, his narrative has focused on predatory out-of-network doctors who exploit a patient’s lack of choice in emergency situations.

While we do not deny that the medical profession has “bad players” in its ranks (as do all professions), New Jersey already has a mechanism, developed by the Department of Banking and Insurance, to flush out truly egregious medical billing.

In any event, the vast majority of “surprise” medical bills are not egregious at all, but merely reflect a published guide that lists Usual, Customary, and Reasonable fees (UCR).  This published UCR guide takes into account the high cost of providing medical services in states such as New Jersey.

UCR may appear high in comparison to Medicare. But Medicare cannot ever be used as a guide for reasonable charges. Medicare can pay a neurosurgeon less, for saving a human life, than the neurosurgeon has to pay a plumber to fix a sink.

On Monday, June 26, the Senate Budget and Appropriations Committee debated bill S-1285, paying a great deal of attention to the “bad players” who are hurting our citizens.  Significantly left out of this discussion, however, was the baddest player of them all – the insurance industry.

This is why we support the out-of-network bill, S-3299 by Sen. Paul Sarlo (D-Bergen). It casts a spotlight on, and fixes, the real source of “surprise” medical bills. Insurance carriers mislead consumers about the benefits offered in their expensive health plans. This practice leaves patients with nasty financial “surprises” at the most vulnerable time in their lives – when they need emergency medical attention.

Sarlo’s bill will hold insurance companies accountable for the medical benefits they promise. If, for example, a police officer buys an expensive OON plan that promises to pay 80 percent of charges, S-3299 will obligate the insurance carrier to come clean about what, exactly, that 80 percent refers to.

Most police officers would assume that 80 percent refers to the doctor’s charge or at least UCR. All too commonly, because there is no transparency, the insurance company will pay 80 percent of a lower rate instead, such as Medicare, leaving the officer with an unaffordable balance bill. Hence the “surprise.”

Sarlo’s bill will provide New Jersey consumers long-overdue protection from these predatory insurance company practices. Vitale’s S-1285 will not.

Loopholes in Vitale’s bill allow two-thirds of insurance plans to escape mandated transparency. Vitale’s bill will allow these plans to continue charging high premiums in return for illusory benefits. This is the opposite of transparency.

Insurance carriers mislead consumers about network adequacy. Currently, when consumers buy insurance, they are not warned that the carrier’s narrow network will make it impossible for them to get specialty or emergency care, even if they make every effort to seek treatment in a network hospital.

S-3299 will hold insurance companies accountable for their increasingly narrow networks. More than half of commercial health insurance plans are either narrow or ultra-narrow. Doctors are not allowed into these networks even if they are eager to do so.

S-3299 will help fix this egregious situation. Consumers will now have a warning, before they buy insurance, whether their plans have adequate networks of providers. They will no longer be “surprised” when the network hospital they choose has no network doctors. Senator Vitale’s bill, on the other hand, will allow insurance companies to avoid these disclosures, while continuing to collect your hard-earned premiums.

For almost a decade, much-needed out-of-network reform has been stalled in Trenton because of disagreements between insurers and providers over how to arbitrate disputed medical charges. Consumers, meanwhile, continue to be hurt by a lack of transparency in the healthcare marketplace. It is time to fix this now. It is time to pass S-3299.

Raj W. Raab is past president of the New Jersey Neurosurgical Society and a member of the board of the New Jersey Doctor-Patient Alliance.