Just as the Centers for Medicare & Medicaid Services (CMS) began holding federal health care plans accountable for their provider network transparency obligations, the New Jersey legislature stalled in its bid to pass a law that would require hospitals and physicians to disclose whether they are in or out-of-network with a patient’s insurance plan before providing treatment. Both laws are intended to curb the exorbitant - and often surprising – costs associated with procedures provided by out-of-network providers.
Under a new rule that went into effect on January 1, 2016, CMS can fine Medicare Advantage (MA) plans up to $25,000 per day per beneficiary, and qualified health plans (QHPs) on the federal exchange up to $100 per day per beneficiary, for inaccuracies in their provider directories. In addition to accurately listing participating providers, which the QHPs and MA plans are required to verify and update quarterly and monthly, respectively, the plans must also identify which providers are accepting new patients, the provider's location, contact information, medical group, specialty and any institutional affiliations. CMS notified QHPs and MA plans of the new rule in separate February 2015 letters.
State regulation of provider directories is not new – more than half the states have such guidelines, including New Jersey. Indeed, New Jersey has one of the more stringent provider directory rules. For example, regulations require insurance carriers to update their electronic directories within 20 days after receiving confirmation from a provider that the existing information is inaccurate, and they must affirmatively confirm the participation of any provider who has not submitted a claim for more than 12 months. In enacting these rules, the New Jersey Department of Banking and Insurance stated it was “essential for consumers to have reliable and current information regarding the healthcare providers participating in a particular network at any given time … and [to] establish enforceable standards for network directories in order for directories to be more reliable and less likely to mislead consumers contemplating joining a network-based health benefits plan or when they attempt to obtain in-network healthcare services and supplies.”
But despite its strict provider transparency rules, New Jersey has been unable pass legislation that would take these obligations a step further by protecting consumers from the large bills associated with surprise out-of-network services. On November 23, 2015, a state Assembly committee approved legislation that sought to hold consumers harmless from such surprise bills, but it faltered in the Senate when, on December 11, 2015, the law’s sponsors pulled it from the agenda after learning it did not have a sufficient number of votes to pass.
Similar to legislation passed in New York and proposed last month in Pennsylvania, the “Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act” has three key components:
- Provider Disclosure Obligations: Health care facilities and professionals would need to provide written disclosure to patients, 30 days prior to a procedure, whether the provider is in-network or out-of-network, a description of the procedure, a reasonable estimate of its costs, and notice to contact the insurance carrier for further consultation. Prior to performing the procedure the provider must ensure that the patient signs and returns the disclosure.
- Insurer Disclosure Obligations: Insurance carriers would need to disclose in writing, at the time of enrollment and on the carrier’s website, a list of in-network providers that is updated every 20 days. In addition, in instances in which an insurer authorizes a service by an in-network provider whose network status later changes, the carrier would need to notify the patient of such change before the service is provided.
- Out-of-Network Billing: Providers would be prohibited from billing (i) patients who receive inadvertent out-of-network services or medically necessary services provided on an emergency basis at any health care facility in excess of the insured’s deductible, copayment or coinsurance amount applicable to in-network services, and (ii) the insured’s plan in excess of an amount that is established by the legislation. If the plan and facility cannot agree on the reimbursement rate for such services, they may initiate binding arbitration.
With enforcement of network transparency and reporting for MA plans and QHPs underway, state lawmakers in New Jersey and elsewhere are struggling to increase consumer protections against the significant financial burdens posed by surprise medical bills for out-of-network services. While some states have managed to pass legislation, others face resistance from payors and providers who find the administrative costs of compliance overly burdensome. Limiting the amount a provider can bill, requiring parties to arbitrate, and undertaking various disclosure obligations require a robust infrastructure to facilitate and implement. But consumers are making their voices heard, and both federal and state lawmakers will continue to seek legislative measures to address them. We will continue to monitor and report on these laws, at both the state and federal level.