S3299 Provides Long-Overdue Consumer Protection from Predatory Insurance Company Practices

The New Jersey Doctor-Patient Alliance, on behalf of health care consumers and providers throughout the State, applaud Senator Paul Sarlo and Steven V. Oroho for the introduction of S-3299.  We support S-3299 because it casts a spotlight on the real source of “surprise” medical bills:

1. Deliberate insurance carrier underpayments to doctors and hospitals which leave patients with nasty financial “surprises” at the most vulnerable time in their lives – when they need emergency medical attention. 

S-3299 will hold insurance companies accountable for the medical benefits they promise. If, for example, the insurance company sells an expensive out-of-network plan that promises to pay 80 percent of charges, S-3299 will obligate that insurer to come clean about what, exactly, that 80% refers to. Most consumers assume that 80 percent refers to the doctor’s charge, or at least usual, customary, and reasonable (UCR) in the community. All too commonly, in a bait-and-switch, the insurance company will pay 80 percent of a lower rate instead, such as Medicare, amounting to only 5-10 percent of UCR.

These artificially low reimbursements leave the patient with significant, unexpected financial liabilities, which insurance companies refer to as “balance bills.” Consumers will not recognize this fact until after they encounter the health care system, at which time it is too late. Hence the “surprise.”

S-3299 will provide New Jersey consumers long-overdue protection from these predatory insurance company practices.

2. Narrow and ultra-narrow networks with inadequate specialty providers.  Currently, when consumers buy insurance, they are not warned that the carrier’s narrow network will make it impossible for them to get specialty or emergency care, even if they make every effort to seek treatment in a network hospital.

S-3299 will hold insurance companies accountable for their increasingly narrow networks. More than half (55 percent) of commercial health insurance plans are either narrow or ultra-narrow. Doctors are not allowed into these networks even if they are eager to do so. S-3299 will help fix this egregious situation. Consumers will now have a warning, before they buy insurance, whether their plans have adequate networks of providers. They will no longer be “surprised” when the network hospital they choose has no network doctors.

In many ways, S-3299 expands on the most laudable aspects of S-1285, addressing transparency and disclosure in health care. But S-3299 does so in a more rigorous fashion, closing the loopholes in S-1285 that allow two-thirds of New Jersey’s insurance plans to escape strict transparency and disclosure mandates. S-3299 provides real protections so that New Jersey consumers can no longer be “surprised” by high balance bills or inadequate networks.

S-3299 will protect New Jersey health care consumers at the “front end,” so to speak, before insurance purchase. Both providers and insurers will be rigorously regulated, generating significant cost savings to our citizens, unions, and state health plans. S-1285, on the other hand, allows two-thirds of insurance plans to continue offering illusory benefits, while forcing “back-end” solutions to the problem, via price-fixing. Price-fixing hurts patients and pads insurance company profits.

For almost a decade, much-needed out of network legislation has been stalled in Trenton because of disagreements between insurers and providers over price-fixing. Consumers, meanwhile, continue to be hurt by a lack of transparency in the healthcare marketplace. It is time to fix this now. It is time to pass S-3299.

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