An Assembly panel on Monday approved a two-bill package sponsored by Assembly Democrats Elizabeth Maher Muoio, Reed Gusciora, Annette Quijano, Wayne DeAngelo, Nancy Pinkin, Valerie Vainieri Huttle and Herb Conaway, Jr., M.D. to ensure adequacy and transparency in health insurance networks.
The bills were born out of the controversy that arose this fall after several of the state’s largest health insurers announced new tiered insurance plans that excluded hospitals in certain primarily urban areas from top tier plans that offer lower out-of-pocket costs.
“These bills will help ensure that, moving forward, large swaths of the state are not excluded from access to affordable health care by requiring insurance networks to meet certain adequacy standards, and above all, making those standards transparent to both healthcare providers and consumers,” said Muoio (D-Mercer/Hunterdon).
The first bill (A-886), sponsored by Muoio, Gusciora, Quijano, DeAngelo and Pinkin, requires health insurance carriers to meet certain network adequacy standards and requires the Commissioner of Banking and Insurance to make a determination of hospital diversity for tiered networks.
“One of the biggest problems we had with the roll out of these new tiered plans was the lack of transparency when it came to how insurance carriers selected which providers would be included in their premium network,” said Gusciora (D-Mercer/Hunterdon). “Without it, there was no way to determine if the process was fair and adequate. This will change all that.”
Under the bill, “network adequacy” means the adequacy of the provider network with respect to the scope and type of health care benefits provided by the carrier, the geographic service area covered by the provider network, and access to medical specialists pursuant to the standards in the regulations promulgated under current law.
“Tiered networks can be beneficial to the consumer if they’re created in a fair and equitable manner so whole communities are not excluded from access to affordable healthcare,” said Quijano (D-Union).
Specifically, the bill would prohibit the commissioner from issuing conditional approvals of provider network adequacy in certain circumstances. Carriers must demonstrate that the provider network or, in the case of a tiered network, each tier of the tiered network, meets all requirements for network adequacy before network adequacy is approved, including having the necessary contracts in place at the time of approval.
“These bills will ensure fairness and transparency in the selection process for tiered networks so that everyone in the state can have access to their benefits,” said DeAngelo (D-Mercer/Middlesex).
In the case of a tiered network, the commissioner must make a determination that each tier of the network includes a diversity of hospitals located throughout the state, including hospitals which provide significant levels of care to low-income, uninsured, and vulnerable populations, to assure that the tiered network does not discriminate against underserved or high-risk populations.
“Hospitals and doctors have already been adapting to the changing market by participating in insurance programs such as ACO’s to delivery high quality at reduced rates. They have long advocated for true network adequacy — the requirement that insurers have enough hospitals and doctors in network to provide patients the care they pay for through premiums,” said Pinkin (D-Middlesex). “The criteria used to rank hospitals and doctors must be transparent and available to the public, hospital and physicians alike. Patients, physicians, and hospitals deserve transparency about how tiering determinations are made.”
The bill also requires the commissioner to formulate a standard network adequacy application to be completed annually by any carrier offering a managed care plan.
Additionally, the bill also stipulates that the commissioner must base any determination of the network adequacy of a managed care plan on the current number of covered persons under that plan, if the plan is currently in effect, as well as the number of projected covered persons anticipated to be enrolled the following year.
The second bill (A-887), sponsored by Muoio, Gusciora, Vainieri Huttle, Conaway and DeAngelo, would require the commissioner of Banking and Insurance to annually evaluate a tiered network adequacy and the evaluation must be certified by the commissioner of Health.
“For months now, we’ve been trying to determine the selection standards used by some of our largest insurance carriers to create their new tiered health plans,” said Vainieri Huttle (D-Bergen). “This bill will end that mystery, and ensure fairness, by requiring clear cut standards laid out by the state so we can ensure that affordable access to healthcare is available to everyone.”
A carrier that offers a managed care plan that provides for in-network benefits and for a tiered network, shall:
a) as selection standards to determine the placement of health care providers in a tier, use at least quality of performance and cost-efficiency measurements that are endorsed by the National Quality Forum, the AQA, Leapfrog, or that are based on other bona fide nationally-recognized guidelines; and may use other performance measurement standards, provided that they are approved by the commissioner.
b) make written disclosures regarding the selection standards used to determine the placement of health care providers in a tier in accordance with the provisions of this act.
“The two primary concerns we had with the rollout of these new tiered health plans was the lack of information available on how these tiers were selected and the number of communities that were left wholly without access to premium tier hospitals,” said Conaway (D-Burlington). “This bill will ensure that the benefits of tiered health plans are available to residents throughout the state.”
The bill also requires an insurance carrier to disclose the following to a health care provider at least 120 days prior to the beginning of a plan’s open enrollment period and at least annually, for each plan that provides for a tiered network:
a) a description of the quality of performance and cost-efficiency measurements or other performance measurement standards used as selection standards to determine the placement of health care providers in a tier;
b) a notice that a health care provider has a right to seek review from, and provide additional information to, the carrier with respect to any selection standards used to determine the placement of the health care provider in a tier, and the data, methodology, formulas or methods used to establish the performance measurements, and to request the carrier to correct errors and to consider additional information; and
c) a notice that a health care provider has a right to appeal the carrier’s placement of the health care provider in a tier, through an appeal process that shall be developed by the department.
Additionally, a carrier shall submit a network for each plan that it offers, to the department for review, at least 120 days prior to the beginning of a plan’s open enrollment period.
The bill also details the information that the department must include in developing a process for a health care provider to appeal a decision by a carrier to place, or not to place, a provider in a tier in order for the process to be transparent and efficient.
At the time that the commissioner approves a carrier’s network, the carrier must disclose the following to consumers for each plan that provides for a tiered network: the names of each health care provider in the network and the tier in which the provider is placed; and a description of the selection standards to determine the placement of health care providers in a tier.
The carriers must also clearly and conspicuously disclose in all promotional and agreement materials the cost-sharing differentials in various tiers.
If any person violates any provision of this act, the Commissioner of Banking and Insurance will have the authority to assess penalties and take any other action provided under current law.
The bills were approved by the Assembly Regulatory Oversight Committee chaired by Gusciora.