New Jersey’s Out-Of-Network Law: What It Means for You
On June 1, 2018, Governor Philip Murphy signed into law the “New Jersey Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act” (the “Act”) establishing new rules for health care facilities, health care professionals and insurance companies regarding: (1) disclosure requirements to patients, (2) limitations on balance billing, and (3) the creation of an arbitration system to resolve billing disputes. Persons and entities affected by the Act are strongly encouraged to put in place appropriate policies and procedures to address the new statutory requirements.
Several key aspects of the Act are highlighted below, particularly those affecting health care professionals. For a more detailed analysis of the Act and the operational issues raised for health care professionals, please review our full client alert available here.
Summary of Key Requirements Affecting Health Care Professionals
- Effective Date of Act: August 29, 2018
- Entities Subject to Act:
- Health Care Facilities: hospitals, ambulatory surgical centers and other licensed health care facilities.
- Health Care Professionals: physicians and other licensed/certified health care professionals providing services covered under a health benefits plan.
- Carriers: Insurance companies authorized to issue health benefits plans, such as health maintenance organizations and including entities such as multiple employer welfare arrangements, State Health Benefits Program and the School Employees’ Health Benefits Program, but excluding certain entities/plans, such as Medicare, Medicaid, personal injury protection, workers’ compensation, and those providing or administering a self-funded health benefits plan, except to the extent such self-insured plans elect to voluntarily comply with the Act’s requirements (i.e., if they “opt in”).
- Disclosure/Notification Requirements: Health care facilities and health care professionals must disclose certain information to patients before scheduling non-emergency/elective services or procedures, such as network status and, in certain cases, the estimated fees and medical codes associated with a service.
- Balance Billing Prohibition: If a patient receives at any health care facility either (1) medically necessary services on an emergency or urgent basis, or (2) “inadvertent out-of-network services,” the facility and health care professional may not bill the patient for costs in excess of the patient’s deductible, copayment, or coinsurance but may bill the patient’s carrier for such costs.
- Mandatory Assignment of Benefits: When a patient receives inadvertent out-of-network services or services on an emergency or urgent basis, the benefits provided by the patient’s insurance carrier are automatically assigned to the out-of-network 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 out-of-network provider. The insurance carrier must also provide the out-of-network provider with a written remittance of payment specifying the proposed reimbursement and the deductible, copayment, or coinsurance amounts owed by the patient.
- Arbitration Procedure: If a carrier and health care provider cannot agree with respect to payment for either (1) medically necessary services on an emergency or urgent basis, or (2) inadvertent out-of-network services, and the amount in dispute is above $1,000, binding “baseball” arbitration may be initiated by either party.
- Cost-Sharing Waiver Prohibition: An out-of-network health care provider may not waive, pay or offer to waive or pay all or part of a patient’s deductible, copayment or coinsurance to induce such patient to seek care from such provider. A pattern of such behavior will be deemed to be an improper inducement. This prohibition will not apply to activity failing under relevant Federal safe-harbors.