WOODBRIDGE — After more than a decades of debate, New Jersey finally has a new law to prevent residents from getting socked by surprise medical bills from out-of-network doctors and hospitals.
Gov. Phil Murphy signed the measure on Friday, declaring it the end of the surprise bills that impact thousands of New Jersey families.
"Today we are opening a new era of transparency and affordability for New Jersey's health care consumers," Murphy said during a bill signing ceremony at the Woodbridge Community Center in Middlesex County. "Today we're finally going to close the holes in our out-of-network rules that cost New Jerseyan more than just money but, in many cases, the peace of mind that their finances should not be ruined because of a health emergency."
"I know this is a huge win," he said.
The new law aims to put an end to the alarmingly high out-of-network bills patients and insurers are charged by hospitals and doctors who don't participate in an insurer's network and won't accept an insurer's reimbursement as full payment. Patients are often billed the remainder of the fee, a practice known as balance billing.
In most cases, patients will go to an in-network hospital but can receive a large bill because a specialist, such as a radiologist or anesthesiologist, who assisted in their care was not part of their insurance network. Cases like that are becoming alarmingly frequent, according to consumer advocates, who claim more than 168,000 state residents receive surprise bills each year for involuntary medical services.
Earlier this week, a report by the Rutgers Center for State Health Policy warned that the issue may be even larger than suspected and that an estimated that one-in-seven New Jersey adults were surprised to receive an unexpectedly large medical bill from a doctor or health care provider last year.
Advocates estimate that the bills amount to more than $420 million annually, or about $2,500 per person. They also blame balance billing for more than $950 million in insurance premium increases.
The new law seeks to address the issue with several transparency requirements mandating that hospitals and doctors' offices to post on their websites the insurance plans they accept, as well as the insurance plans accepted by the specialists who may perform procedures there. The bill also requires patients to be notified and informed of the expenses they could incur if they agree to treatment from an out-of-network doctor, and it creates an arbitration process to settle disputes between insurers and hospitals or physicians for cases when a patient involuntarily receives out-of-network care.
Getting the legislation approved and onto Murphy's desk was no easy feat for the lawmakers who wrestled with the issue for more than 10 years before reaching a compromise this year that hospitals, insurers and consumer advocates were able to unite behind.
Physician groups remained opposed, arguing that the changes would limit their bargaining power with insurers over networks and reimbursement and that the changes could force some doctors and specialists to flee the state.
The bill's prime sponsors, Assembly Speaker Craig Coughlin, D-19th of Fords, and Sen. Joe Vitale, D-19th of Woodbridge, said the final compromise bill was the result of hours of meetings and hearings so that the many stakeholders involved could provide input and debate.
Coughlin said the legislation sought to strike balance between the interests of consumers, insurers and doctors, but that protecting patients from being surprised by over-the-top bills became paramount.
"Think of the person who has to pay $10,000 or $100,000; the bill can be that high," Coughlin said. "That ends today."
"Everyone agreed — even the people opposed to the bill today — that people should not be surprised by medical bills," Vitale added.
Sen. Troy Singleton, D-7th of Palmyra, was unable to attend the bill signing ceremony but was credited by Coughlin and Vitale as being deeply involved in the negotiations on the issue, both during his prior tenure as a state assemblyman and this year as a new senator.
"Too many New Jersey families, even those with quality health insurance plans, have found themselves facing thousands of dollars in out-of-network health care charges they never even had the chance to review, let alone agree to, prior to receiving medical attention," Singleton said in a statement. "This new law puts patients first and will help them make smarter decisions and limit the financial hardships they face by increasing pricing transparency."
Maura Collinsgru, health care program director for the progressive advocacy group, New Jersey Citizen Action, called the law a "win-win for health care consumers."
"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," she siad. "Consumers no longer can be on the hook for charges from an out-of-network provider they had no choice in selecting."
In addition to saving consumers money, Murphy and other supporters said it also provides an avenue for significant taxpayer savings for the state.
Murphy's proposed $37.4 billion state budget for fiscal year 2019 projected $81 million in savings from an out-of-network law based on the assumption that state employee health benefit plans would be altered to achieve greater savings by encouraging employees to care from in-network doctors and providers. They said the new law's patient protections and transparency makes that achievable.
Murphy said the new law also fulfills one of his campaign promises.
"I made closing the out-of-network loophole a pledge of my campaign and today I'm proud to call it a promise kept," the governor said.