New Jersey Out-Of-Network Law: What It Means For You
On June 1, 2018, Governor Philip Murphy signed into law the Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act (the “Act”). The Act created new requirements for health care facilities, health care professionals and insurance carriers as it relates to out-of-network (“OON”) health care services. The Act establishes rules regarding (i) limitations on balance-billing by OON providers with respect to emergency and inadvertent services performed in a health care facility; (ii) disclosure requirements to patients regarding OON health care services; and (iii) the creation of an arbitration system for certain OON billing situations.
With an effective date of August, 29, 2018, the Act presents new compliance challenges for health care facilities, health care professionals and insurance carriers that will need to be addressed immediately. While the Act requires the New Jersey Department of Banking and Insurance, the New Jersey Department of Health, the New Jersey Board of Medical Examiners and other professional Boards to promulgate regulations and/or issue administrative guidance necessary to implement the Act, these various agencies are not expected to promulgate guidance or regulations before the effective date. Therefore, persons and entities affected by the Act are encouraged to put in place at least preliminary processes/procedures as of the effective date that would be subject to revision once the various agencies weigh in.
Summarized below are several key requirements of the Act, particularly those affecting health care professionals, and the operational considerations they raise.
I. Out-Of-Network Balance Billing Prohibition
The Act prohibits OON providers and health care facilities from balance billing patients for (i) emergency or urgent medically necessary services, and for (ii) “inadvertent out-of-network services” in excess of that patient’s deductible, copayment, or coinsurance amount applicable to in-network services under that patient’s health care plan. The Act defines “inadvertent out-of-network services” as health care services that are: (i) covered under a managed care health benefits plan that provides a network; and (ii) provided by an OON health care provider in the event a patient utilizes an in-network health care facility for covered health care services and, for any reason, in-network health care services are unavailable in that facility. Additionally, insurance carriers are required to incorporate into a patient’s Explanation of Benefits a provision explaining that all inadvertent and involuntary OON charges are not to be subject to balance billing.
The health care professional may still bill the patient’s insurance carrier for the OON services. However, if the patient’s insurance carrier and health care professional cannot agree on a reimbursement rate for the OON services, then the insurance carrier must issue payment in the amount of its final offer to the health care professional. Then, in the event the amount in dispute exceeds $1,000, the parties may proceed to the newly established binding arbitration process described below.
- Operational Considerations
- Coordination and Communication Between Health Care Professionals and Health Care Facilities with Respect to Emergency and Inadvertent OON Services: Health care facilities and health care professionals may take different positions with respect to the scope of the terms “emergency” and “inadvertent” OON services. Since the balance billing prohibition applies to both the health care facility and the health care professional(s) rendering emergency and inadvertent services, it would be best for both parties to have a similar understanding of the scope of the prohibition.
- Modification of Automatic Balance Billing Mechanisms: If there are any patient accounting system rules that automatically balance bill patients, they should be modified to prevent automatic balance billing in the case of OON emergency and inadvertent services.
II. Disclosure Requirements for Health Care Professionals
Prior to the provision of non-emergency services to a patient, health care professionals are required to disclose, either in writing or through an internet website, the health benefits plans and facilities in which they participate or with which they are affiliated. This information must also be communicated to the patient verbally or in writing at the time of the appointment. An OON health care professional must provide additional service specific disclosures to a patient prior to scheduling a non-emergency procedure, including (i) the health care professional’s OON status, (ii) that the health care professional’s fee estimate is available upon request (a provider must also provide the Current Procedural Technology (“CPT”) codes associated with that service if also requested by the patient), (iii) that the patient may have financial responsibility for the OON services in excess of his or her copayment, deductible or coinsurance, and (iv) refer the patient to his or her insurance carrier for further consultation on costs. The Act further requires a health care professional to promptly notify the patient if the health care professional’s network status changes during the course of the patient’s treatment. In the case of a primary care physician or internist performing an unscheduled procedure in that provider’s office, the notice described above may be made verbally at the time of service.
- Operational Considerations
- Continuous Monitoring and Staff Training Regarding OON Disclosures: Health care professionals must continuously monitor and update their network status information provided to patients in writing or via a website and continuously ensure staff understand and appropriately implement procedures for disclosure/notification at the time of appointment and for prompt disclosure to patients with respect to changes to network status after an appointment is made (e.g., through staff training).
- Written OON Disclosure Form: While the service specific disclosure is not required to be made in writing, it would be best to utilize a written form to document the patient’s understanding.
- OON Fee Estimate/CPT Code Process: Health care professionals must have a mechanism/process to disclose the estimated fees for a non-emergency procedure and associated CPT codes upon a patient’s request.
A physician is also required to provide the patient with identifying information regarding certain ancillary health care professionals (i.e., anesthesiologists) who are scheduled to treat the patient in the physician’s office or at a health care facility, and with instructions on how to determine whether the other health care professionals participate with the patient’s health benefit plan.
- Operational Consideration – Assess What is Known about Ancillary Providers at Time of Scheduling: The Act contains ambiguities with respect to the requirements for ancillary provider notification; we will hopefully receive further guidance from the various agencies implementing the Act. To determine appropriate procedures in the interim, health care professionals should first assess what they generally know (or, arguably should know, e.g., due to a set-in-advance coverage schedule) with respect to ancillary providers at the time of scheduling both office and facility services.
III. Disclosure Requirements for Health Care Facilities
A health care facility is required to make certain disclosures to patients prior to scheduling an appointment for a non-emergency or elective procedure. For purposes of the Act, a “health care facility” includes hospitals, satellite emergency departments, hospital based off-site ambulatory care facilities in which surgical cases are performed and ambulatory surgery facilities. Notably, if the facility is in-network with respect to the procedure, the facility must advise the patient that (i) the patient’s financial responsibility will not exceed his or her copayment, deductible or coinsurance, and unless the patient has knowingly, voluntarily, and specifically selected an OON provider, the patient will not incur any out-of-pocket costs in excess of the charges applicable to an in-network procedure; and (ii) any bills, charges or attempts to collect by the facility or any health care professional involved in the procedure in excess of the patient’s copayment, deductible, or coinsurance in violation of this requirement should be reported to the patient’s insurance carrier and the relevant regulatory entity.
- Operational Consideration – Coordination and Communication Between Health Care Professionals and Health Care Facilities: In order for health care facilities and health care professionals to each develop appropriate procedures, they should share information regarding network status so that each can determine where there may be “gaps” with respect to network participation (e.g., situations where the facility is in-network and the professional is out-of-network). Out-of-network physicians scheduling non-emergency/elective procedures at in-network health care facilities may want to coordinate with the facilities with respect to implementing appropriate procedures to ensure that a patient agreeing to OON professional services in the facility does, in fact, “knowingly, voluntarily and specifically select” an OON professional to perform the services.
IV. Mandatory Assignment of Benefits
When a patient receives inadvertent OON services or services on an emergency or urgent basis, the benefits provided by the patient’s insurance carrier are automatically assigned to the OON provider. This assignment occurs without any action on the part of the patient. Once the benefits are assigned, any reimbursement paid by the insurance carrier must be paid directly to the OON provider. The insurance carrier must also provide the OON provider with a written remittance of payment specifying the proposed reimbursement and the deductible, copayment, or coinsurance amounts owed by the patient.
V. Arbitration Requirements
The Act provides that, in the event a patient receives inadvertent OON services or emergency or urgent services, the insurance carrier must ensure that the patient does not incur a greater out-of-pocket cost than the patient would have incurred with an in-network health care provider for covered services. The OON provider is prohibited from balance billing the patient, but the provider may still bill the insurance carrier for the OON services. The insurance carrier may either pay the billed amount or, within 20 days of receipt of the claim, notify the OON provider that the claim is excessive. The insurance carrier and OON provider then have 30 days to negotiate a final reimbursement amount. If no settlement is reached, the insurance carrier must pay the provider the insurance carrier’s final offered reimbursement amount for the services. Then, binding arbitration may be initiated within 30 days provided the difference between the insurance carrier’s final offer and the provider’s final offer is equal to or greater than $1,000. The arbitrator will review written submissions by both parties and the arbitrator’s decision will be one of two amounts: either the provider’s final offer or the carrier’s final offer. Notably, the arbitration system under the Act does not apply in situations where a patient “knowingly, voluntarily, and specifically selected an out-of-network provider.”
- Operational Consideration – Arbitration Processes/Procedures: Health care professionals should develop processes/procedures to initiate arbitration and to calculate their “final offer.” Consider what documentation may be available to document that the final offer is reasonable (e.g., past EOBs).
VI. Voluntary Compliance by Self-Funded Plan
Self-funded plans are only subject to the Act if they voluntarily elect to comply with the “hold harmless” provision of the Act with respect to emergency and inadvertent OON services. Therefore, unless a self-insured plan “opts in”, the balance billing prohibition will not apply with respect to a patient covered under a self-insured plan. A self-funded plan that opts in must – in a form and manner to be determined by the Department of Banking and Insurance – issue a health insurance identification card that indicates whether the plan is self-funded and whether it has elected to be subject to the Act.
- Operational Consideration – Determine Processes to Obtain Information Regarding Self-Insured Plans: As we await further guidance and information from the Department of Banking and Insurance with respect to self-insured plan identification and disclosure of “opt-in” status, health care professionals should assess their current processes to determine whether a patient has a self-insured plan.
VII. Waiver of Cost Sharing
It is a violation under the Act for a provider to directly or indirectly knowingly waive, rebate, give, pay (or offer to do any of the same) all or part of a patient’s deductible, copayment, or coinsurance to induce the patient to obtain health care services from that OON provider. A pattern of such behavior will be considered an inducement by the OON provider. This prohibition, however, does not apply to cost sharing waivers that fall within a safe harbor under applicable federal laws.
A health care facility or insurance carrier that violates the Act will be liable for a penalty of up to $1,000 per violation (every day during which a violation occurs is considered a separate violation) but capped at a penalty of $25,000.
A person or non-health care facility/non-insurance carrier entity that violates the Act will be liable for a penalty of up to $100 per violation (every day during which a violation occurs is considered a separate violation) but capped at a penalty of $2,500. Further, noncompliant health care professionals may be referred to the appropriate professional and occupational licensing board for appropriate action.
Health care professionals should continuously monitor the regulatory implementation of the Act and consider submitting comments on proposed rules.
Should you have any questions regarding the Act and what it means for you and your business, please do not hesitate to contact one of the attorneys below in our Health Care and Hospital Group.
Nicole DiMaria | Member | email@example.com | 973.530.2111