Surprise medical bills could end under New Jersey law signed by Gov. Phil Murphy

Gov. Phil Murphy declared an "end to the days of surprise medical bills" as he signed one of the strongest consumer protection laws in the nation on Friday, culminating nearly a decade of legislative wrangling over an issue that adds $1 billion annually to health-care costs. 

"Today, we're finally going to close the holes in out-of-network rules that cost New Jerseyans more than just money," he said, but also "peace of mind." No one should worry that a trip to the emergency room will send them to collections or bankrupt them, he said. 

The governor traveled to Woodbridge, the hometown of the law's two main Democratic sponsors, state Sen. Joseph Vitale and Assembly Speaker Craig Coughlin, for the signing ceremony. Advocates of the measure and participants in years of negotiations cheered its enactment.  

The ceremony capped a busy week in health care for Murphy, who also signed bills that maintain aspects of the Affordable Care Act in New Jersey as Congress and the Trump administration work to undo them.  

One retains the individual mandate, requiring almost everyone to buy insurance or pay a penalty through state taxes. Another seeks to stabilize health insurance premiums by creating a reinsurance fund to cushion insurers from extraordinary claims.   

Health news:New Jersey C-section rate is still high. See how your hospital compares

Coming soon:Stew Leonard's wins approval for store at Paramus Park mall

NJ news:Advocates to walk 300 miles for driver's licenses for undocumented immigrants

Surprise medical bills could end

Murphy called the "The Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act,” which passed in April largely along party lines, "a promise kept" from his campaign.   

An estimated 168,000 patients receive out-of-network bills that total $420 million annually, he said.  

"The knock-on impact to the rest of us who are paying higher premiums because of that [is] another $950 million," he said. This year's state budget anticipated $81 million in savings from the law's enactment.  

Such bills occur when a patient goes to a hospital that is part of his insurance plan's network to receive care, but some of the providers over whom the patient has no choice — anesthesiologists, pathologists, or radiologists, for example — don't participate in the patient's insurance.  

The average for such bills is $2,500, a report by New Jersey Policy Perspective, a progressive Trenton think-tank said, but it can be much higher.  An out-of-network surgeon called to a hospital emergency room, for example, can bill a patient tens of thousands of dollars.   

The law is expected to usher in a new era of transparency when it takes effect in 90 days. It requires health-care providers to disclose what they expect to charge for out-of-network services, and insurers to disclose what they expect to pay, so patients will clearly know their own financial responsibilities. 

Binding arbitration

Its most controversial provision requires out-of-network doctors and hospitals to submit to binding, baseball-style arbitration with insurance companies when disputes arise over reimbursement. An arbitrator would choose between the final offers of each side as the final reimbursement. 

Specialist doctors had predicted dire consequences from the law's enactment, saying it will give insurance companies the upper hand in fee negotiations and drive many doctors to move their practices out of state.  

"This isn't a pro-patient bill," said John D. Fanburg, an attorney who represents societies of anesthesiologists, radiologists, pathologists and obstetrician/gynecologists. "It's a pro-insurance company bill." Opponents are "considering their options," he said. 

The Medical Society of New Jersey supports "the patient protections required by the new law," a statement said, and will help doctors who find themselves in arbitration proceedings.  

When insurers offer payments that are too low, the society will work to make sure they cover the "true cost of health care," said John Poole, its president and a surgeon at Holy Name Medical Center in Teaneck.  

But the hospital association, whose support ultimately helped ensure its passage, hailed the law as "a sound compromise" that created a level playing field in negotiations between hospitals and insurers. 

New Jersey is the sixth state to enact such legislation. The law's detailed requirements of both insurers and health-care providers go further than in any other state. 

Benefits for all?

The biggest question remaining is whether the new consumer protections will benefit everyone with private insurance.  That hinges on a distinction that is often invisible to the insured person: whether they are covered by a self-funded plan or a fully-insured plan. 

Self-funded plans, commonly used by large, multi-state corporations and unions, are governed by federal law and fall outside of state regulation. About 70 percent of New Jersey residents with employer-sponsored insurance are estimated to be in such plans.  

The new law allows them to "opt in" to its provisions. But if they do not, patients still could be stuck with high out-of-network bills. Opponents of the law say this "opt in" provision may be an unconstitutional intrusion by the state into an area of federal jurisdiction, and could be the basis for a lawsuit to challenge the law.  

Those covered by the State Health Benefits Program and other employer-sponsored coverage, as well as those who buy their own coverage, will be protected by the new law. It is not retroactive.  

Email: washburn@northjersey.com