Governor Signs Nation’s Strongest Law On ‘Surprise’ Medical Bills

NJ Spotlight

Doctors remained deeply concerned that law will weaken their negotiating power with insurance carriers, cost them money

Advocates for patients, senior citizens, labor unions, and businesses hailed Gov. Phil Murphy’s signing of a complex and controversial measure designed to curb the impact of costly “surprise” medical bills in New Jersey. Supporters said the law, nearly 10 years in the making, is the strongest of its kind nationwide.

But physicians, and specialists in particular, remain concerned the reform will erode their negotiating power with insurance companies and sap them of critical revenue they can use to offset the cost of treating those without healthcare coverage — and eventually diminish patient care. Several professional groups are now coordinating resources to help doctors who may face payment struggles as a result of the new law and are refocusing other efforts to reduce the regulatory burdens on Garden State providers.

“The law opens up a lot of uncertainty in the healthcare market,” which could lead some doctors to stop serving some hospitals or communities, explained Dr. Peter DeNoble, an emergency physician and president of the New Jersey Doctor-Patient Alliance, which has opposed the law. “That trickles down to an access-to-care problem.”

Murphy signed the landmark out-of-network law on Friday, more than six weeks after it passed the state Legislature, at a community center in Woodbridge Township, the home base of Sen. Joe Vitale and Assembly Speaker Craig Coughlin (both D-Middlesex), the longtime champions of the reform. The out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act is scheduled to take effect in three months.

Putting patients first
The Democratic governor, who pledged his support for the bill in March, said the law closed a loophole to protect patients and make healthcare more affordable; sponsors called it the right thing to do to protect vulnerable residents. “We have put patients first. We have made clear that New Jersey stands for transparency when it comes to health care,” Coughlin said.

“When you’re in the business of fighting to advance laws that help people in a deep and meaningful way, days like this are truly what we live for,” Vitale added. “Today marks the end of unethical practices that surprise patients with unexpected out-of-network charges at the worst time possible — when they are sick or recovering from illness and already coping with more than their share of difficulty.”

The reform is designed to protect patients, businesses, and others who pay for medical care from the high-cost bills associated with emergency or unintentional care from doctors or other providers who are not part of their insurance network. The law requires greater disclosure from both insurance companies and providers — so patients are clear on what their plan covers — ensures patients aren’t responsible for excess costs, and establishes an arbitration process to resolve payment disputes between providers and insurers, a mechanism intended to better control costs.

While New Jersey law already includes several protections designed to shield emergency patients from extreme charges, advocates note that some 168,000 residents each year still received “surprise” bills from doctors who are not part of their insurance network. These bills average $2,500 per person and add as much as $800 million to the taxpayer’s tab to insure state workers, they said, and increase the cost of insurance in the Garden State by roughly $1 billion each year.

A huge win
Curbing these costs is a huge win for all healthcare consumers, from individual patients to labor unions and small businesses, stressed the NJ for Health Care Coalition, which includes New Jersey Appleseed Public Interest Law Center, AARP, Consumers Union, and other groups that led the advocacy on the bill over the years.

“It puts patient protection above provider profit and rightfully places the burden of resolving surprise out-of-network bill disputes on payers and providers where it belongs. Consumers no longer can be on the hook for charges from an out-of-network provider they had no choice in selecting,” said Maura Collinsgru, healthcare program director for New Jersey Citizen Action, another pillar in the NJ For Health Care Coalition.

The reform was also attracted support from the New Jersey Business & Industry Association — the cost of healthcare remains the primary concern for small business in this state — and Better Choices, Better Care NJ, a coalition of labor, business, and patient advocates supported by Horizon Blue Cross Blue Shield, the state’s largest health insurance company.

“It’s a solution that is fair to healthcare providers and consumers alike because it strikes a balance between providing reasonable compensation to facility-based providers, while protecting consumers from unexpected, nonnegotiable bills that drive health insurance premiums higher,” said NJBIA president and CEO Michele Siekerka. “This was an extremely difficult and complicated issue, and NJBIA commends the governor and the bill sponsors who worked hard to address the concerns of all stakeholders.”

Medical naysayers
While provider groups had generally shunned certain aspects of the reform, the New Jersey Hospital Association also pledged its support following several key amendments late in the process. But the New Jersey Medical Society and other physician groups favored other proposals that focused on increased transparency, without addressing arbitration. The state Department of Banking and Insurance already has a process in place to resolve disputes, which MSNJ believes is working well enough on its own.

In light of the new law, MSNJ is now focusing its advocacy on other health insurance-related policies, and has prepared its longstanding Claims Assistance Program to help support physicians in billing disputes that might arise from the reform. It is also lining up arbitration experts and collecting payment data relating to specialist care, the group said. Doctors are concerned that, with the new restrictions, physicians will be less likely to open or maintain practices in the Garden State.

“We have long supported a fair dispute-resolution process that protects patients by having the insurer cover true cost of healthcare,” said Dr. John Poole, MSNJ president. “These resources will ensure that physicians have evidence and data to support their position in a baseball-style arbitration.”

Although most medical bills do not end up in arbitration, that was the aspect of the legislation that has divided stakeholders over the years. The law sets a timeline and other parameters for negotiations between the payer and the provider and, if they can’t resolve the issue, requires the state to hire an independent expert to decide between the final offers presented by both sides. While earlier drafts of the bill included a range of factors for the arbitrator to consider in making this decision — including the doctor’s experience, the patient’s condition, and certain payment benchmarks — these details were eliminated entirely in the final version.

“There’s a huge gap of vagueness that has to be filled” in the way the law addresses arbitration, said DeNoble, with the Doctor-Patient Alliance, which is also bringing in experts to help its 300-plus physician members handle any disputes. “No one really knows how it’s going to play out over time.”