On June 1, 2018, New Jersey Governor Phil Murphy signed into law the “Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act” (the “Act”). In the preamble to the Act, the New Jersey legislature described the goals of the Act, including to address “surprise” medical bills for patients who use out-of-network providers and to limit the costs paid by consumers in these circumstances. This Alert summarizes key provisions of the Act.

The Act will affect hospitals, surgery centers, physicians, insurers and consumers.  Specifically, the Act affects charges to a “covered person,” which is defined in the Act as, “[A] person on whose behalf a carrier is obligated to pay health care expense benefits or provide health care services.”  Generally, the Act applies to New Jersey regulated health benefit plans (i.e., it does not apply to federally regulated self-funded plans unless a self-funded plan opts to participate).

For hospitals and surgery centers, prior to scheduling an appointment with a “covered person” for a non-emergency or elective procedure, the facility must, “in terms the covered person typically understands”:

• disclose whether it is in-network or out-of-network with respect to the covered person’s health benefits plan;
• advise the covered person to check with the physician arranging the facility’s services to determine whether the physician is in-network; and
• provide specific information to the covered person with respect to the in-network vs. out-of-network health benefits plan, including financial responsibility in excess of the copayment, deductible or co-insurance.

Importantly, unless the covered person at the time of this disclosure, has “knowingly, voluntarily and specifically selected an out-of-network provider” to provide services, the covered person will not incur any out-of-pocket costs in excess of the charges applicable to an in-network procedure.   

Under the Act, hospitals and surgery centers must also: (1) make available a list of standard charges; and (2) post on their websites certain information, including the health benefits plans in which the facility is a participating provider; a statement that physician services provided in the facility are not included in the hospital’s charges; a statement that physicians who provide services in the hospital may not participate with the same health benefits plans as the hospital; and if there is any change between the date the notice is provided to the patient and when the procedure takes place, the facility must promptly notify the patient.  The New Jersey Department of Health is to provide further specification and detail about the content and design of the required disclosures.  

The obligations of physicians and other individuals acting within the scope of their license, include the following:   

• disclose in writing or through a web page the health benefits plans in which the health care professional participates prior to the provision of non-emergency services and provide this information again (either verbally or in writing) at the time of the appointment;
• prior to scheduling a non-emergency procedure for a patient, inform the patient that the health care professional is out-of-network and the estimated amount that the health care professional will bill the patient for the service; and
• provide information to the patient recommending that the patient contact their insurer to better understand the costs for services.  

Insurers’ obligations include the following:    

• update their webpages within 20 days of the addition or termination of a provider from an insurer’s network;
• provide specific information with respect to out-of-network health care benefits including the methodology used to determine the allowed amount for out-of-network services;
• examples of anticipated out-of-pocket costs for frequently billed out-of-network services; and
• provide access to a telephone hotline no less than 16 hours per day for consumers to ask questions.   

As part of its annual regulatory filing, insurers will be required to disclose the number of claims submitted by health care providers to the insurer which are denied or down coded by the insurer and the reason for the denial or down coding determination.  An insurer providing a managed care plan shall also provide an annual audit of its provider network, at its expense, by an independent auditing firm, which will be posted to the Department of Banking and Insurance’s web site.     

Other highlights of the Act include:

• an arbitration process to resolve an out-of-network billing dispute; and
• financial penalties and administrative discretion for remedies for failure to comply with the various requirements.   

A copy of the Act is available online here.  The Act takes effect at the end of August (90 days following enactment).   It is not yet know when regulations interpreting the Act will be published.   

The Act attempts to address one of the frustrations of patients in the health care delivery system.  Out-of-network issues are regularly profiled in the media, particularly as it relates to transparency and “surprise” invoices for patients receiving services at a hospital with which the patient is in-network.  The Medical Society of New Jersey has been advocating for legislation to increase participating provider network adequacy and fair contracts and reimbursements for participating providers. Other states, including Pennsylvania, are similarly considering legislation relating to out-of-network issues.   New Jersey-based physicians, hospitals, surgery centers and payors should carefully review the Act, monitor the status of regulations relating to the Act, and be prepared to make changes to their respective business practices before the end of August to ensure compliance with the Act.