The law is limited to applicable claims for “out of network” and inadvertent services providing a statutory codification of regulatory provisions which have been in existence for many years. In addition, there are new transparency and disclosure requirements for out of network fees pertaining to all parties, physicians, hospitals, and insurers.
The provisions of the law provide for a new state administered “baseball arbitration system” for out of network claims where there is a dispute on the fee in question which exceeds $1,000. For the first time, that system will include the ability for patients to arbitrate claims.
For a more comprehensive summary, please see Summary section below. We will provide additional resources to assist our members with compliance with the new law in the near future. The law is slated to take effect on September 1.
We will continue to vigilantly monitor the new process as the enactment of the law becomes effective, and we will seek the appropriate legislative and regulatory remedies to outstanding issues.
What you need to know:
Summary of the Provisions of the
OON Law Pertaining to Physician Disclosure Requirements
The "Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act” was passed by the Legislature on April 12, signed into law on June 1 and will become effective on September 1. The law applies to emergency and “inadvertent” care, meaning care provided by out-of-network physicians in in-network settings (i.e. hospital-‐based physicians). NJAOPS fought certain onerous provisions through our active participation in the New Jersey Access to Care Coalition. We must stay vigilant and monitor unintended consequences of the new law, and seek further legislative and or regulatory changes as needed.
In general, the provisions of the law are applicable to state-‐regulated insurance plans. The law does not apply to federally regulated self-‐funded plans (about 70% of New Jersey’s insurance market), UNLESS a self-‐funded plan opts in to participate in the arbitration program. If it does, then the hold harmless patient protection and the assignment of benefits rule are also triggered. The law only applies to patients with federally-‐regulated plans that do NOT opt in by allowing them to bring physicians to arbitration to dispute charges.
Disclosure and Hold Harmless
The law codifies the State regulation that provides a prohibition on balance lawing beyond a patient’s in network rate. Current regulation: That a covered person's liability for services rendered during a hospitalization in a network hospital, including, but not limited to, anesthesia and radiology, where the admitting physician is a network or out-‐of-‐network provider and the covered person and/or provider has complied with all required preauthorization or notice requirements, shall be limited to the copayment, deductible and/or coinsurance applicable to network services. N.J.A.C. 11:22-‐5.8
The law also addresses a key Coalition concern by requiring insurers to share network adequacy audits with the State. The insurers have opposed this requirement for years, even though we clearly have network adequacy issues, with shortages in specialties from primary care to psychiatry to hospital specialists. We have always said we have an in-‐network problem, not an out-‐of-‐network problem. The requirement will hopefully shed light on contracting issues and improve access for patients.
The Coalition fought hard to find balance in the arbitration system, which now closely resembles the existing one. The new system uses a baseball style (the arbitrator must choose between the physician’s charge and the insurer’s offer of payment) when the difference between the charge and the offer is greater than $1000. There are no statutory criteria required for arbitrators to consider. There are no caps on payments.
Of note, the arbitration costs of the “new” program are split, just like the current program, so there should be no great incentive for insurers to tie physicians up with arbitration. In fact, the sponsors of the legislation hoped arbitration will be used as infrequently as it is used today. Please see the FAQ on the existing program as a reminder of its structure and rules:
Currently, New Jersey’s arbitration program uses Fair Health as a benchmark. The State also uses Fair Health to benchmark out of network payments for patients covered by the state health benefits programs.
Ability to Waive Charges
This section is of great concern. The prohibition of patterns of waiver of copays or other patient liabilities: “It shall be a violation of this act if an out-‐of-‐network health care provider, directly or indirectly related to a claim, knowingly waives, rebates, gives, pays, or offers to waive, rebate, give or pay all or part of the deductible, co-payment, or coinsurance owed by a covered person pursuant to the terms of the covered person’s health benefits plan as an inducement for the covered person to seek health care services from that provider.”
We must monitor this and hope that regulators will not apply this section of the law unfairly and that insurers do not use it to initiate or amplify frivolous fraud investigations. We urge members to advise us if this happens. With requirements for insurers to provide better explanations of patient liabilities, the sticker shock of deductibles will hopefully go down. But, since financial hardships will remain, evidence of true, intended patterns of inducement must be required. We must seek legislative and or regulatory changes to these provisions in order to adequately protect patients and physicians.
The law triggers analysis under the Supremacy Clause and whether federal laws (ERISA or Taft Hartley) preempt the opt-‐in allowance. There is an abundance of case law on the issue. We believe this issue will be litigated, causing uncertainty of the viability of the law.
Patient Arbitration (New)
The law creates an arbitration system for patients who have federally-regulated health plans would be permitted to fight physician laws. The arbitration process is binding in determining what the physician may collect and provides a non-binding recommendation of what the patient’s insurance should pay. This is problematic, as it will create tension between physicians and patients and may also raise preemption issues. We hope that existing State laws on excessive lawing and federal rules for patient complaints (e.g. U.S. Department of Labor) will be honored. *This process is NOT allowed for voluntary services or for patients with health plans that opt-in to the law. Once again, this is only applicable for emergency or inadvertent care.
Summary of Physician Disclosure Requirements:
Section 5 a.
A health care professional shall disclose to a covered person in writing or through an internet website the health benefits plans in which the health care professional is a participating provider and the facilities with which the health care professional is affiliated prior to the provision of non‐emergency services, and verbally or in writing, at the time of an appointment. If a health care professional does not participate in the network of the covered person’s health benefits plan, the health care professional shall, in terms the covered person typically understands: (1) Prior to scheduling a non-‐emergency procedure inform the covered person that the professional is out-of‐network and that the amount or estimated amount the health care professional will law the covered person for the services is available upon request; (2) Upon receipt of a request from a covered person for the service, disclose to the covered person in writing the amount or estimated amount that the health care professional will law the covered person for the service, and the CPT codes associated with that service, absent unforeseen medical circumstances that may arise when the health care service is provided; (3) Inform the covered person that the covered person will have a financial responsibility applicable to health care services provided by an out-‐of-‐network professional, in excess of the covered person’s copayment, deductible, or coinsurance, and the covered person may be responsible for any costs in excess of those allowed by their health benefits plan; and (4) Advise the covered person to contact the covered person’s carrier for further consultation on those costs.
b. A health care professional who is a physician shall provide the covered person, to the extent the information is available, with the name, practice name, mailing address, and telephone number of any health care provider scheduled to perform anesthesiology, laboratory, pathology, radiology, or assistant surgeon services in connection with care to be provided in the physician’s office for the covered person or coordinated or referred by the physician for the covered person at the time of referral to, or coordination of, services with that provider. The physician shall provide instructions as to how to determine the health benefits plans in which the health care provider participates and recommend that the covered person should contact the covered person’s carrier for further consultation on costs associated with these services.
A physician shall, for a covered person’s scheduled facility admission or scheduled outpatient facility services, provide the covered person and the facility with the name, practice name, mailing address, and telephone number of any other physician whose services will be arranged by the physician and are scheduled at the time of the pre-admission, testing, registration, or admission at the time the non-‐emergency services are scheduled, and information as to how to determine the health benefits plans in which the physician participates, and recommend that the covered person should contact the covered person’s carrier for further consultation on costs associated with these services.
The receipt or acknowledgment by any covered person of any disclosure required pursuant to this section shall not waive or otherwise affect any protection under existing statutes or regulations regarding in-‐network health benefits plan coverage available to the covered person or created under this act.
If, between the time the notice required pursuant to subsection a. of this section is provided to the covered person and the time the procedure takes place, the network status of the professional changes as it relates to the covered person’s health benefits plan, the professional shall notify the covered person promptly.
EXCEPTION: f. In the case of a primary care physician or internist performing an unscheduled procedure in that provider’s office, the notice required pursuant this section may be made verbally at the time of the service.
Laurie A. Clark
Laurie Clark is NJAOPS’ government affairs and legislative counsel. She is also president of LegisServe, a Governmental Affairs Agency located in Princeton, NJ.
© 2018 New Jersey Association of Osteopathic Physicians and Surgeons
The Journal is the official magazine of the New Jersey Association of Osteopathic Physicians and Surgeons (NJAOPS). NJAOPS is the sixth largest state affiliate of the American Osteopathic Association. NJAOPS represents the interests of more than 4,700 active osteopathic physicians, residents, interns and medical students. Founded in 1901, NJAOPS is one of the most active medical associations in New Jersey with 12 county societies.