As Trenton tackles the issue of high medical bills that can result when patients get care outside their insurance company network, the state's largest health insurer on Wednesday released a study that concludes New Jerseyans could see lower monthly premiums if the state's current out-of-network regulations are changed.
Horizon Blue Cross Blue Shield of New Jersey commissioned the study by the consulting firm Avalere Health and has launched a website where the study is posted and the issue explored in detail: WhatHealthCareCostsNJ.com.
According to Avalere, New Jersey’s current out-of-network rules “expose consumers, employers and governments to higher insurance premiums after the fact by requiring health plans to reimburse a provider up to 100 percent of whatever is charged.”
State Sen. Joseph Vitale (D-Woodbridge) told NJBIZ that work is progressing on an OON bill and “We will likely have it completed within a month or so.” He said meetings are continuing among himself and the three assemblymen who are leading the work on the bill: Assemblyman Craig J. Coughlin (D-Woodbridge), chair of the Assembly Financial Institutions and Insurance Committee; Assemblyman Gary Schaer (D-Passaic), the former chair of that committee; and Assemblyman Troy Singleton (D-Mount Laurel).
Vitale said it’s too soon in the process for him to discuss details of how the legislature might address the OON issue.
Horizon said that, under the current state regulations, in emergency care situations and when patients are involuntarily treated by OON doctors at in-network facilities, health insurance companies are effectively required to pay the full amount charged by OON doctors. He said health plans must then incorporate these costs into the insurance premiums charged to New Jersey residents and businesses.
“New Jersey’s OON regulations were designed to protect consumers from excessive financial burden. Unfortunately, a small group of hospitals and doctors are abusing the regulations to increase their own bottom lines, particularly in emergency care situations, when people typically have less control over who their doctor is. These practices are driving up health care costs for the entire state,” said Robert A. Marino, chief executive of Horizon. “We are asking New Jersey’s lawmakers to enact meaningful reform of these regulations to control rising out-of-network health care costs for all New Jersey residents and businesses.”
Horizon — the state’s largest health insurer, with a nearly 48 percent market share — said it paid more than $1 billion for all out-of-network costs in 2014.
Joel Cantor, director of the Rutgers Center for State Health Policy, told NJBIZ: “The cost of out-of-network treatment is a serious problem in New Jersey. Consumers are often faced with strikingly high and unexpected bills, even when they thought they made their best effort to seek care in-network.”
The Avalere paper offered five different approaches to reforming the state’s OON regulations that included both setting various payment benchmarks or implementing arbitration procedures. The paper analyzed the advantages and disadvantages of each approach if it were applied to New Jersey.
Cantor said: “As the Avalere study points out, the practice of charging very high out-of-network rates has serious implications for health insurance premiums paid by employers, government and individuals. Developing a reasonable fee schedule seems like the most efficient way to solve the problem. Arbitration can be a helpful alternative, but would add a layer of complexity and administrative cost.”
Dennis Kelly, chief executive of CarePoint Health, which owns three Hudson County hospitals, told NJBIZ:
"The math speaks for itself: If urban safety net providers who treat the state’s highest population of uninsured and underinsured do not receive adequate reimbursement from third-party insurance companies and, therefore, can’t make up the financial deficit left by insufficient payments from Medicaid, Medicare and charity care, hospitals will close.
"This is not speculation, as it has already happened to 26 hospitals — the majority in urban environments — that have closed since deregulation. We are happy to participate in a constructive dialogue about the health care reimbursement system in our state, in its entirety, and not just this one component that compromises the health care safety net in order for a few companies to increase their margins."
Ray Castro, senior policy analyst for New Jersey Policy Perspective, said: “This report identifies a major problem in New Jersey, which is the practice of some providers to game the system by going out of network, which allows them to gouge insurance companies. Unfortunately, the real victims are the many consumers who have insurance, because they end up paying higher premiums to defray these excessive costs.
“This is one of the of reasons why New Jersey is consistently ranked as having one the highest insurance premiums in the nation, which makes it unaffordable for so many. This report should be a wake-up call for the Legislature to pass legislation that ends these abusive practices once and for all.”
“Other states have addressed this major cost driver; it’s New Jersey’s turn to address this and get it right for our residents,” Marino said.