United States: New Jersey Enacts Law To Eliminate Surprise Medical Bills

Last Updated: July 25 2018
Article by Susan Feigin Harris and Robert L. Abramowitz

New Jersey Governor Phil Murphy signed a new law on June 1 called the "Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act," which enacts some of the most specific punitive measures in the country against providers and health plans relating to the receipt of out-of-network healthcare services and surprise medical bills. New Jersey's law continues the trend of many states that are getting tough on providers and payors on the issue of transparency in pricing and surprise medical bills. Indeed, even in the most recent Physician Medicare physician fee schedule proposed rule, transparency and the need to reduce the incidence of surprise bills takes center stage. With hospitals being required to post their charges on their websites by January 2, 2019, the New Jersey law lays the groundwork for new state laws that follow in its stead. 

The New Jersey law contains the same notice provisions that most states have adopted relating to provider-based physician fees. Interestingly, it makes a distinction between accessing "inadvertent out-of-network services," which are services accessed essentially in emergency situations. In contrast, "knowingly, voluntarily and specifically" selected out-of-network services are treated differently in the law, for purposes of exacting punitive measures on providers and for purposes of rate setting.

Hospitals are specifically required to make available to the public a list of the facility's standard charges for items and services, as well as post to its website the health benefits plans in which the facility is a participating provider, a list of the hospital-based physician groups that the facility has contract with, and a list of physicians employed by the facility, including a list of the health plans in which the physicians participate. The statute also requires providers to supply each patient, upon request, an estimate of fees, and requires facilities to establish public postings regarding standard charges. The hospital must also post a statement to the public warning that physician services are not included in the facility's charge; physicians who provide services in the facility may or may not participate with the same health plans as the hospital; and patients should check their health benefit plan for coverage and network participation.

This same set of requirements also applies to physicians and physician groups under the law. In particular, the law also requires that a physician provide to any patient information on any healthcare provider scheduled to perform anesthesiology, laboratory, pathology, radiology, or assistant surgeon services in connection with care performed in the doctor's office or clinic or referred for service.

With regard to payment for accessing inadvertent out-of-network services, the law instructs that providers shall not bill patients in excess of the patient financial obligations set forth under their coverage plan, i.e., essentially setting the rate for patients at an in-network rate. The same provisions apply to the insurance carrier in the event the covered person accesses services on an emergency basis inadvertently out of network. The law instructs the carrier that it shall ensure that the covered person incurs no greater out-of-pocket costs than the covered person would have incurred in network. The provider may bill the carrier or plan for any excess amount. If the provider and the payor cannot agree on the amount of reimbursement, the statute establishes a speedy arbitration process between the provider and the payor to resolve out-of-network billing disputes, with the arbitrator limited to choosing between one of two final offers submitted by the parties.

Separate rules apply to self-insured plans subject to the Employee Retirement Income Security Act (ERISA.) See here for more on those rules.

Penalties

Penalties include $1,000 per violation, with every day of the violation considered a new violation, but no carrier or facility shall be liable for a penalty greater than $25,000 per occurrence. For health facilities, their licenses can be compromised by notice to the state's commissioner of health for such action as the commissioner deems appropriate.

Network Adequacy

Under the new law, insurers are required to perform an annual audit of their provider network by an independent auditing firm. If the results illustrate an inadequate network for services, such failure is a violation of the law and the entity is subject to action by the commissioner of health.

Waiver of Cost Sharing

The new law expressly prohibits the waiver of any patient financial obligations as an incentive to induce the patient to obtain services from that provider. The waiver of copayments, deductibles, provision of rebates, or payment of coinsurance have been controversial as mechanisms to entice patients to access out-of-network providers. This new law expressly outlaws those actions, assuming they do not meet the safe harbor associated applicable fraud and abuse laws.

This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.

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