Democratic Lawmakers Introduce Landmark Legislation to Increase Transparency in Out-of-Network Care Costs

Bill Calls for Written Disclosure of Services Insurance May Not Cover to Be Issued At Least 30 Days Prior to Scheduled Medical Procedures

Senate Health, Human Services and Senior Citizens Committee Chair Joseph F. Vitale and Assembly Democrats Craig Coughlin, Gary S. Schaer and Troy Singleton on Thursday introduced comprehensive consumer protection legislation intended to eliminate surprise out-of-network health care charges.

“It is completely unreasonable and horribly unsafe to expect a patient lying on a hospital bed waiting to go into surgery to ask the anesthesiologist assigned to their care if they accept their insurance,” said Vitale (D-Middlesex). “For far too long, insurance companies and providers in New Jersey have failed to negotiate contracts in good faith and have used patients as their bargaining chip in an effort to maximize their profits. This bill protects patients by taking them out of the fight and insulating them from balance billing while giving providers and insurance companies a path to compromise.”

“Far too many New Jersey families – even those with quality health benefits plans – find themselves fighting insurance companies over thousands of dollars in out-of-network charges they never even had the opportunity to review, let alone agree to, prior to receiving medical attention,” said Coughlin (D-Middlesex). “This legislation is about putting patients first and defending the consumer’s right to be able to make an informed decision about how to proceed with his or her health care.”

The “Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act” is designed to: increase transparency in pricing for health care services, enhance consumer protections, create a system to resolve certain health care billing disputes, contain rising costs and measure success with respect to the aforementioned goals.

The bill would require health care facilities and health care professionals to provide a patient with a written disclosure form that outlines the following at least 30 days prior to a non-emergency or elective procedure:

– whether the health care facility or professional is in-network or out-of-network in respect to the patient’s health benefits plan
– that, if the facility or professional is in-network, the patient will not incur any out-of-pocket costs outside of those typically applicable to an in-network procedure unless he or she has knowingly, voluntarily and specifically selected an out-of-network provider to provide services
– that, if the facility or professional is out-of-network, the patient will have a financial responsibility applicable to health care services provided at an out-of-network facility or by an out-of-network professional

In addition to providing the patient with the aforementioned form, the facility or professional would be required to, prior to the procedure and in layman’s terms, provide the patient with a description of the procedure, a reasonable estimate of the costs for those services and information on all other costs related to the procedure. The patient would then be required to sign and return the form to the health care facility or professional.

Under the bill, insurance companies would also be required to publish on their websites a list, to be updated at least every 20 days, of all in-network providers. Companies would be required to disclose the list to covered persons upon their enrollment in the plan and upon any subsequent request for a copy of the list.
“If they were given the choice between continuing with medical care that ultimately would lead to substantial out-of-pocket costs and considering other options that carry a lower price tag, the vast majority of reasonable New Jersey residents certainly would choose the latter. The problem, at present, is that they don’t have that choice,” said Schaer (D-Bergen/Passaic). “By implementing reforms to numerous aspects of the health care delivery system in New Jersey, increased transparency in out-of-network services chief among them, this legislation will help make health care more affordable for individual consumers and will make the system more efficient overall.”

“Patients routinely make a concerted effort to stay within what they think are the parameters of their health benefit plan, only to find out weeks later that they’re being held financially responsible for the services of an out-of-network medical provider,” said Singleton (D-Burlington). “The reforms included in this bill are designed to afford consumers, employers, medical providers and policymakers with the information they need to make well-informed decisions about buying and using health care through data-driven, evidence-based improvements in access, quality and the cost of health care.”

Should a patient receive medically necessary emergency services at an out-of-network health care facility or inadvertently receive care that is in and of itself covered by insurance from an out-of-network professional, the bill stipulates that the patient may incur no greater out-of-pocket costs than he or she would have incurred with an in-network provider for covered services.

The legislation also calls for the establishment of a Healthcare Price Index (HPI), a publicly-reported source of reliable and comprehensive health information, including all median commercial paid in-network claims. Should a patient receive medically necessary emergency services at an out-of-network health care facility or inadvertently receive care that is in and of itself covered by insurance from an out-of-network professional, an insurance company could not be billed more than 250 percent of the median paid in-network commercial claim for a service, to be derived from the HPI.

The bill outlines a process of binding arbitration to be initiated for certain emergency and out-of-network billing situations in the event that a carrier and health care provider cannot agree on a reimbursement rate using the HPI. Arbitration would not be an option for covered individuals who knowingly select an out-of-network provider for services available through their insurance company’s network.

Any health care facility or carrier that violates any provision of the bill would be subject to a maximum penalty of $1,000 per violation.