New Jersey is Failing Patients

New Jersey is the only state in the country that fails to protect its residents against predatory out-of-network billing.

Not only are protections missing, under New Jersey law, out of network providers don't even have to tell their patients that they are out of network.

Here's an example, if an out-of-network surgeon bills $85,000 for a procedure that insurers normally pay $2,000 with a $200 co-pay for, and the insurer provides an out of network benefit of 60 percent, the insurer pays $51,000 and the patient is on the hook for $34,000.

According to New Jersey Assembly bill A1952, out-of-network charges cost New Jersey residents about a billion dollars per year.

William Castner, the senior vice president of corporate and regulatory affairs at Horizon Blue Cross Blue Shield, speaking at a healthcare IT summit on November 1, urged people to use social media to try to influence state legislators to pass A1952.

Castner characterized out-of-network providers as "a microscopic number of largely specialists and super-specialists…who are driving up the cost of healthcare astronomically in the state."

Out-of-network experience at Osler Health, Horizon's second largest accountable care organization (ACO) next to Hackensack Meridian, the dominant hospital system in New Jersey, is anything but "microscopic." Of the 8,115 doctors who have seen Horizon insured patients through the Osler system in the past two years, 24.1 percent are completely out-of-network and an additional 16.6 percent were out-of-network at one time or another.

Which brings us to Assembly bill A1952, in part, requiring out-of-network providers to warn patients beforehand. And requiring binding arbitration when they don't.

Disclosure mandates only apply to those commercial plans that are state regulated.  The requirements do not apply to plans that are self-funded, which represent over two thirds of the commercial plans in New Jersey. Patients do get some protection in emergency situations.

Arbitration over excessive billing practices does protect patients from the process, reportedly favoring health plans sufficiently for Horizon BCBS to, at one point, agree to a $300 million state raid on its reserve fund if the bill became law.

Other states are not quite so equivocal. As in ALL other states, which protect patients against predatory healthcare billing practices to one degree or another for the same reasons they outlaw fraud and theft.

As it stands, if half the specialists left, New Jersey would still handily top the national average of fewest patients per capita per specialist.

Out of Network Billing is the Tip of the Iceberg

Protecting consumers requires understanding the fundamental causes of a problem. In this case, that means understanding cost. At the heart – it isn't what physicians reasonably charge, it is what they spend, which drives the cost of care far more than price. Systemic abuse is far less sexy than scandalous overcharging, and far more damaging.

A fundamental cost driver is physicians that treat a similar patient at a vastly higher cost because they run up the bill with added diagnostics and services in a process called churning.

Here is a brief example of responsible care and churned care.

Responsible Care:

Jim had a lesion about the diameter of a pencil eraser on his head that needed to be removed. A doctor removed it in his office in five minutes start to finish including numbing the area with an injection. The cost to insurance was a few hundred dollars.

Churned Care:

Because the pencil eraser sized wound was on his scalp, Jim was sent to a plastic surgeon to close the wound that afternoon to minimize scarring. This process also took less than five minutes from injecting a local anesthetic to the last suture snip - in a full operating room with full sterile drapes in ambulatory surgery center with an anesthesiologist and two nurses. The cost to insurance, thousands. The cost to in deductible and co-insurance, over one thousand. The excuse, "the light was better."

Even when doctors are in-network with an insurer, they can have their way with you, your insurer and your pocketbook. And, insurers pay while regulators look away. Uncovered medical expenses, insured or not, are the leading cause of bankruptcy in the U.S. at 40 percent and as high as 62 percent in New Jersey.

James Doulgeris is the CEO of Osler Health. Osler Health is a statewide clinically collaborative accountable care organization comprised of elite primary care physicians dedicated to setting the high bar for the best care, service and value in New Jersey.