State of New Jersey Assembly Passes Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act

The Assembly Financial Institutions and Insurance Committee of the State of New Jersey 216th Legislature, on Monday November 23rd, approved Bill No. 4444, Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act (“Bill”).

As stated in the Bill, “The Bill reforms various aspects of the health care delivery system in New Jersey to increase transparency in pricing for health care services, enhance consumer protections, create an arbitration system to resolve certain health care billing disputes, contain rising costs associated with out-of-network health care services, and measure success with regard to these goals.”

The Bill

Major insurance carriers in the State of New Jersey claim that surprise out-of-network bills have created at least a $1 billion problem in the state that causes premium amounts for policyholders to increase.

In an effort to alleviate this problem, the Bill will require health care facilities and professionals to notify patients about the services that they provide. As a result, providers are now required to give patients a minimum 30-day written disclosure notice prior to a scheduled procedure to let the patient know whether or not the provider that will be performing the procedure is in-network or out-of-network. This disclosure will contain specific information including, but not limited to, a description of the procedure and an estimate of the costs of the procedure that the facility will charge. The disclosure must be signed by the patient and returned to the facility. The hospital or health care facility is also required to publish on their website a list of the standard charges for the service, which insurance carriers are accepted and a statement that doctors in the facility may or may not accept the same insurance as the facility.

In addition, the Bill places certain responsibilities on insurance carriers such as maintaining and posting a list of all providers that are in-network with respect to each health benefit plan offered by the carrier.

Importantly, the Bill places limits on what out-of-network providers can charge in two situations: (1) if a covered person receives medically necessary services at any health care facility on an emergency or urgent basis; and (2) inadvertent out-of-network services. The Bill provides that:

If a covered person receives inadvertent out-of-network services or medically necessary services at an in-network or out-of-network health care facility on an emergency or urgent basis, the health care professional performing those services shall not bill:

1. the covered person in excess of any deductible, copayment, or coinsurance amount applicable to in-network services pursuant to the covered person’s health benefits plan; and
2. the carrier in excess of an amount that is the maximum of the payment range established in the Bill. If the carrier and the professional cannot agree on a reimbursement rate for these services within 30 days after the carrier is billed for the service, the carrier or professional may initiate binding arbitration.

The Bill establishes a binding independent arbitration process for decisions on billing disputes between insurance carries, the health care facility and the consumer. This involves a peer review panel made up of doctors with expertise in the specific specialty involved in the dispute. This panel makes a recommendation on whether or not the billed amount is fair for the service, which must be taken into consideration by the arbitrator when making a final ruling. No amount less than $1,000 will be considered for arbitration.

Healthcare Price Index

Although originally part of the Bill, the Healthcare Price Index (“Index”) will exist as separate legislation in an approved companion bill that creates a health care price index of billing claims data. The Index will be overseen by the Department of Banking and Insurance which will be responsible for selecting a data storage company and a management company. The data will be collected from various sources including, but not limited to, medical claims, behavioral health claims, provider and covered person eligibility files, and Medicaid and Medicare claims. This data represents objective information in order to help improve the transparency of health care prices in the State.

Conclusion

Sponsors of the Bill include Assemblyman Craig Coughlin (D-Woodbridge), Senator Joseph Vitale (D-Woodbridge), Assemblyman Gary Schaer (D-Passaic) and Assemblyman Troy Singleton (D-Mount Laurel). Now that approval at the committee level is complete, the Bill heads to the full State Assembly for a vote. As transparency becomes a heightened topic at the Federal and State level, clear health care pricing and insurance information is even more crucial to consumers, insurance companies and health care facilities. The Bill attempts to ensure that healthcare providers are supplying patients with as much information as possible to allow them to make better-informed health care decisions and to better control costs associated with health care services.

View Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act

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