On June 1, New Jersey Governor Phil Murphy signed legislation that imposes new disclosure obligations on state healthcare providers and insurers, and changes the way healthcare providers can charge for out-of-network services. The new law, titled the Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act, also has an impact on self-insured health plans subject to ERISA and their participants. As explained below, self-insured health plans subject to ERISA that cover individuals who obtain healthcare in New Jersey will need to determine by the end of August whether to elect to be subject to the act.
In broad brush, the legislation addresses “surprise” out-of-network medical charges, such as charges for services administered during an emergency from providers who are not part of the patient’s network. For nonemergency patients, the statute requires healthcare facilities and professionals to provide information—before the patient receives services—as to the in-network or out-of-network status of the providers, and a disclaimer regarding the responsibility of the patient to pay any additional out-of-network fees. The statute also requires providers to supply each patient, upon request, an estimate of fees, and requires facilities to establish public postings regarding standard charges. Health insurance carriers are required to provide written notice of changes to their network, and provide detailed information about out-of-network services, including the methodology used to determine the allowed amount for out-of-network services.
For out-of-network services administered on an “emergency or urgent basis,” the statute generally restricts the amount a provider may charge to any covered person to the deductible, copayment, or coinsurance amount applicable to in-network services. The provider will bill the carrier or plan for any excess amount. If the provider and the payor cannot agree on the amount of reimbursement, the statute establishes a speedy arbitration process between the provider and the payor to resolve out-of-network billing disputes, with the arbitrator limited to choosing between one of two final offers submitted by the parties.
Various plans are expressly excluded from the new law, including Medicare, Medicaid, and TRICARE. The statute provides an opt-in procedure for “self-funded health benefits plans,” which are defined as self-insured health benefits plans governed by ERISA. By implication, and absent regulatory guidance, self-insured health benefits plans not subject to ERISA, such as governmental and church plans, would appear to be subject to the new law.
A self-insured plan subject to ERISA that wants to be subject to the act would do so by filing an annual notice with the state and amending its plan documents to reflect that the benefits of the statute apply to the plan’s members. If a plan opts in, its members would not be balance billed for out-of-network charges for emergency care in excess of the deductible, copayment, or coinsurance amount applicable to in-network services, and the plan can take advantage of the act’s binding arbitration provisions. The opt-in plan must provide each primary insured with a health insurance identification card indicating that the plan has elected to be subject to the act.
A self-insured plan subject to ERISA that does not want to opt in need take no action. If the plan does not opt in, its members may be balance billed for out-of-network treatment. If the provider and a member do not resolve a payment dispute within 30 days after the member has been sent a bill, the member or provider may initiate binding arbitration to determine payment for the services. The arbitrator’s decision will include a final binding amount that the arbitrator determines is reasonable, and a nonbinding recommendation to the self-insured plan of its reasonable contribution for payment. Subject to an exception for financial hardship, the arbitrator’s expenses and fees are divided equally between the provider and the member.
The act takes effect 90 days after enactment (on or near August 30). Self-insured plans covering individuals in New Jersey will need to decide whether to elect to be subject to the act. We are awaiting regulatory guidance as to many details, including the opt-in election and the additional disclosure obligations for covered self-insured plans. Please feel free to reach out to the author or your Morgan Lewis contact if you would like to discuss the pros and cons of opting in, or the potential impact of the act on your health plan or operations.