Category: Insurance

Bipartisan Legislation Aims to Limit Surprise Medical Bills

On September 18, 2018, a bipartisan group of Senators unveiled a draft measure to limit patients’ exposure to surprise medical bills. The draft bill is sponsored by Senator Bill Cassidy (R-LA) and has received support from Senators Tom Carper (D-DE), Todd Young (R-IN), Claire McCaskill (D-MO), Chuck Grassley (R-IA) and Michael Bennett (D-CO).

The bill is intended to limit balance billing to patients in the following three circumstances:

  1. Emergency services provided by an out-of-network provider in an out-of-network facility: The draft bill would limit a patient’s financial exposure when receiving emergency services at an out-of-network facility to the cost sharing amount provided by their health insurance plan for the same services provided by an in-network provider at an in-network facility. Providers would be prohibited from billing the patient any additional amount. Rather, amounts in excess of the cost sharing amounts would be paid by the insurer in accordance with state law. If state law does not establish the applicable amount, the health insurer would pay the greater of: (a) the median in-network amount for services charged by a provider in the same specialty and area; or (b) 125% of the average amount allowed by insurers for the service for a provider in the same specialty and area.
  2. Non-Emergency services following an emergency service at an out-of-network facility: When a patient has received emergency services from an out-of-network provider and requires additional non-emergency services after being stabilized, the draft bill requires the facility to notify the patient in writing that they may be required to pay higher cost-sharing than if they received services at an in-network facility and provide the patient with the option to transfer to an in-network facility. The patient must sign an acknowledgement that they received such notification. If the patient elects to remain in the out-of-network facility, the draft bill does not limit the amount the facility can charge for the additional services provided.
  3. Non-Emergency services performed by an out-of-network provider at an in-network facility: The draft bill would also prohibit an out-of-network provider, who provides non-emergency services at an in-network facility, from billing the patient beyond the amount of their in-network cost sharing. Rather the excess amount would be paid by the insurer at an amount determined in the same manner as for emergency services provided by an out-of-network provider.


The bill remains a draft and is not scheduled for vote. However, the bipartisan support for the bill suggests it may gain significant traction or at least jumpstart additional discussions in Congress about how to limit the use of balance billing.

What You Need To Know About New Jersey’s Out-of-Network Legislation

The New Jersey legislature recently passed the Out-Of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act”, a bill that has been heavily contested since its introduction. Drafters of the bill believe that its passage will lead to a reform of the current health care delivery system by (i) increasing transparency in pricing for health care services, (ii) enhancing consumer protections, and (iii) creating an arbitration system to resolve certain health care billing disputes. Those that have questioned the bill worry it will be a mechanism for carriers to avoid covering out-of-network bills for health care services by providers. What is undisputed is that this new system for handling out-of-network care is likely the first of its kind in the country and will have a significant impact on health care in New Jersey. Following passage by both houses the bill now goes to the governor’s desk for review.


The bill requires health care providers (including both health care facilities and health care professionals) to disclose certain information to patients prior to rendering services to the patient. For non-emergency or elective procedures, the facility must disclose to the patient: (i) whether the facility is in-network or out-of-network with respect to that patient’s health plan, (ii) advise the patient to confirm his or her provider’s status (i.e., in-network vs. out-of-network) with respect to the patient’s health plan and (iii) advise the patient that for in-network facilities, the patient will have a financial responsibility applicable to an in-network procedure. If the facility is out-of-network under that patient’s health plan, the bill requires the facility to advise the patient of the out-of-network status and explain that any such service may carry out-of-network costs and encourage the patient to discuss with his or her health plan.

Further, the bill requires that the facility’s website contain a list of standard charges for items and services provided by the facility, including but not limited to: (i) the health plans in which the facility participates; (ii) a statement that (a) physician services provided in the facility are not included in the facility’s charges; (b) physicians who provide the services at the facility may or may not participate in the same health plans as the facility, and (c) advise the patient to check with the physician and their insurance carrier for further information; (iii) when applicable, the name, mailing address, and telephone number of hospital-based physician groups with whom the facility contracts; and (iv) when applicable, the name, mailing address, and telephone number of physicians employed by the facility whose services may be provided at the facility and the health plans in which they participate.

The bill includes a similar requirement for health care professionals. Prior to performing non-emergency services, a health care professional must disclose, either in writing or via its website, the health benefit plans in which it participates and the facilities with which the health care professional is affiliated. This information must also be provided to the patient at the time of the patient’s appointment. As with the facility, if the professional is considered out-of-network under the patient’s heath plan, the professional must inform the patient of its out-of-network status and provide an estimate of the cost of services. For all patients, including in-network, the professional must also inform the patient of any other health care provider scheduled to perform services (i.e., anesthesiology, laboratory, pathology or radiology) in connection with the patient’s care and provide the patient with instructions on how to determine the health plans accepted by those providers.

Carriers are also affected by the bill. The bill requires carriers to update their website within 20 days of the addition or termination of a health care provider from its network. The carrier is also required to provide the patient with a clear and understandable explanation of the plan’s out-of-network health care benefits, including the amount the plan will reimburse under the carrier’s methodology to determine reimbursement for out-of-network services. The carrier’s website also must provide examples of anticipated out of pocket costs for frequently billed out-of-network services and also contain enough information to allow the patient to calculate the out of pocket costs for out-of-network services in their geographical region or zip code. Carriers also are given the responsibility of notifying a patient of a facility’s change of in-network status if the patient had previously received carrier’s authorization to obtain services at such facility. If the carrier does not provide this notice at least 30 days prior to the scheduled service, the patient will be billed as if the services were in-network.

Limits on Out-of-Network Billing/Balance Billing

Aside from transparency, the bill also addresses out-of-network charges to a patient. The bill limits out-of-network reimbursement in two scenarios: (i) if a patient receives emergency or urgent medical treatment at an out-of-network facility and (ii) in the event of inadvertent out-of-network services. An “inadvertent out-of-network service” is a service that is covered under a managed care contract that provides a network, but the service is provided by an out-of-network provider at an in-network facility due to unavailability of in-network services in that facility.

For emergency or urgent medically necessary services, the facility and/or provider cannot bill the patient in excess of any deductible, copayment, or coinsurance amount applicable to in-network services per the patient’s health plan. If the carrier and the facility are unable to agree on the reimbursement rate within 30 days of the carrier being billed for the services, the carrier and the facility may enter into binding arbitration. This requirement is also present when a patient receives inadvertent out-of-network services on an emergency or urgent basis. The facility may not bill the patient in excess of any deductible, copayment, or coinsurance amount. If unable to agree on an amount, the carrier and the facility must arbitrate. In other words, the facility cannot “balance bill” or bill the difference between what the carrier will reimburse and the cost of the services to the patient. Further, the bill requires any in-network facility to ensure that medical professionals contracted to provide services at the facility are in-network for the same health plans as the facility and that providers of emergency care accept reimbursement rates in accordance with the bill’s provisions.


For carriers that choose to “opt-in” to arbitration, upon receipt of an out-of-network bill, the carrier will have 20 days under the proposed legislation to either pay the billed amount or, if the carrier believes that the amount billed is excessive, notify the provider of its determination. If the carrier provides such notice of its determination, the carrier and the facility will have 30 days to negotiate the amount that the carrier will reimburse the facility. If the facility and the carrier cannot agree on a final offer and the difference between the final offers of each is not less than $1,000, then either party may initiate binding arbitration and at the conclusion of the 30 days the carrier shall pay the provider the carrier’s final offer. If a carrier does not elect to opt-in to the arbitration and balance-billing protections of the bill, the plan member or out-of-network health care provider may initiate binding arbitration to determine payment for the services by filing a request with the department.

Arbitration will begin with a review of a final offer from both the carrier and the provider. The “baseball style” of arbitration will be applied, meaning that the arbitrator will choose to accept either the provider’s offer or the carrier’s offer. The decision will be issued within 30 days after the request is filed with the department. In most cases, the arbitration fees will be split evenly among the two parties, with the one exception occurring if the arbitrator believes that the payment made by the carrier was not in good faith, requiring the carrier to pay all fees associated with the arbitration. While a prior version of the bill required the arbitrator, in making his/her decision, to review the level of experience and training of the health care professional, the provider’s usual charge for comparable services provided in-network and out-of-network, the circumstances and complexity of the services, the individual patient’s characteristics, and the average in-network and average out-of-network amount paid for the service by the carrier, the final version passed by the legislature eliminated that language.


In addition to the impacts on providers, carriers and patients, the legislation also is intended to increase overall transparency of our health care system. For example, the commissioner of the Department of Banking and Insurance (“DOBI”), in consultation with other agencies, will be required to annually publish certain data including: (1) a list of all arbitrations filed and the award amounts; (2) the percentage of facilities in-network for each carrier in the State; (3) the number of out-of-network complaints received by the department relating to out-of-network health care charges; (4) the number of physician specialists in the State and whether they are in-network or out-of-network; and (5) the results of the network audit required by the legislation. Carriers will also be required to calculate, and report to DOBI, the savings that result from the provisions of the bill and DOBI is required not only to publish this information but produce a report to the Governor each year on the savings to policyholders and the healthcare system.

Now that both houses of the legislature have approved the bill, the Governor has 45 days to act on the bill.  As with all proposed legislation, he can either conditionally veto the bill, pocket veto the bill or sign the bill into law.  If the bill is signed by the Governor, it will go into effect 90 days thereafter. During that 90 day period, DOBI will promulgate rules to implement the new law. The regulations proposed by DOBI could either strengthen the bill or provide some flexibility to providers, especially those specialty providers, who choose to remain out-of-network.

Out-of-Network Legislation Advances in New Jersey

After a decade of fits and starts, legislation aimed at curbing surprise bills to consumers who receive medical services outside their insurer’s networks, appears to have enough steam to hit the Governor’s desk shortly.

The surprise billing issue can arise under two very different sets of circumstances:

In the first, the use of the out-of-network provider is elective.  A patient has a plan that includes out-of-network benefits, usually covered at a lower level than the benefits that would apply to an in-network service.  The patient may want to use a particular provider who is not in the insurer’s network.  In order to know what the patient’s out-of-pocket costs would be, he or she would have to know the amounts that would be billed, the deductible, copayment and coinsurance under their insurance plan, and the ‘allowance’ that those cost-sharing amounts would be applied to.  Many, if not most, of these data points are currently beyond the reach of the average consumer.

The second set of circumstances involves non-elective use of an out-of-network provider.  It may be services received at an in-network hospital that are billed by an out-of-network hospital-based physician – such as an anesthesiologist, radiologist, pathologist or emergency room doctor.  The patient had no choice in the selection of the hospital-based physician, but may be subjected to billing for whatever the insurance doesn’t cover.  It may also involve emergency services, when the hospital the patient is taken to is out-of-network.

The bill, S485/A2039 deals with these two issues differently: by imposing transparency requirements on providers and insurers for the former, and by placing limitations on billing for non-discretionary uses of out-of-network services for the latter.

Transparency Requirements

For the first, the bill imposes transparency requirements.  It would require facilities to inform prospective patients about their network status, provide information on the network status of employed physicians, and advise them to inquire as to the network status of those who are not.  It also requires that they provide information on their websites including standard rates.

Health care professionals are also required to provide internet or written disclosure of the plans in which they participate.  If they are out-of-network, they are required to provide an estimate of how much they will bill upon request, and let the patient know that they will have a financial responsibility for amounts not covered.

The law also requires insurers to, among other things:

  • Update their on-line provider directory within 20 days of the addition or deletion of a provider from their network;
  • Provide a clear description of the plan’s out-of-network benefits, including the methodology to determine the allowed amount for out-of-network services; and
  • Provide examples of anticipated costs for frequently billed out-of-network services.

Billing for Non-discretionary Services

The more controversial aspect of the bill has been the process to resolve billing disputes for emergency and other nondiscretionary uses of out-of-network services (the latter are referred to in the bill as “inadvertent out-of-network services”).

If a carrier and out-of-network provider cannot agree to a reimbursement rate, a carrier, facility, or covered person can initiate binding arbitration.

The bill anticipates that the Department of Banking and Insurance would contract with one or more firms to perform the arbitrations.  If a party initiates arbitration, the arbitrator would review the final amount offered by the carrier, and the final amount demanded by the provider, and the decision will have to be one of the two amounts.

The Federal Employee Retirement Income Security Act preempts state laws that relate to employee benefit plans, with the notable exception of state insurance law.  Because of this preemption, the arbitration is mandatory for insured plans, but not for self-insured employee welfare benefits plans.  It does, however, include a provision under which self-insured plans may opt in to the arbitration process, in which case the prohibition on balance billing, and the decision of the arbitrator, are both binding.

S485 was released by the Senate Commerce Committee and A2039 was released by the Assembly Appropriations Committee this past Thursday afternoon. It is expected that the bills will head to the floor of both houses for a full vote on April 12th.