New Report Connects Reform of NJ’s Out-of-Network Healthcare Reg to Significant Cost Savings

According to an analysis by Avalere Health, LLC, New Jersey residents could see significant reductions to their monthly premiums if the state’s current out-of-network (OON) regulations are reformed. Horizon Blue Cross Blue Shield of New Jersey (Horizon BCBSNJ) released the analysis today as well as a website explaining the issue in more detail. The Avalere paper’s findings come at a time when the New Jersey Legislature is exploring how it can address rising out-of-network costs.

The cost of paying OON hospitals and doctors for health care services in New Jersey is growing. According to Avalere, New Jersey’s current rules “expose consumers, employers, and governments to higher insurance premiums after the fact by requiring health plans to reimburse a provider up to 100 percent of whatever is charged.”

Existing regulations do not place any limits on what OON doctors or hospitals can charge, even in emergency care situations. As a result, some of these doctors and hospitals have made a business out of setting prices that have no correlation to the actual cost of care. In emergency care situations and when patients are involuntarily treated by OON doctors at in network facilities, health insurance companies are effectively required to pay the full amount charged by OON doctors under current regulations. Health plans must then incorporate these excessive and unfair costs into the insurance premiums charged to New Jersey residents and businesses.

“New Jersey’s OON regulations were designed to protect consumers from excessive financial burden. Unfortunately, a small group of hospitals and doctors are abusing the regulations to increase their own bottom lines, particularly in emergency care situations when people typically have less control over who their doctor is. These practices are driving up health care costs for the entire state,” said Robert A. Marino, chairman and CEO of Horizon BCBSNJ. “We are asking New Jersey’s lawmakers to enact meaningful reform of these regulations to control rising out-of-network health care costs for all New Jersey residents and businesses.”

Horizon BCBSNJ, the state’s largest health insurer with a nearly 48 percent market share, paid more than $1 billion for all out-of-network costs in 2014. If out-of-network costs continue to increase without proper checks and balances, health insurance premiums will continue to rise for New Jerseyans who are already burdened by some of the highest health insurance premiums in the country.

The Avalere paper offered five different approaches to reforming the state’s OON regulations that included both setting various payment benchmarks or implementing arbitration procedures. The paper analyzed the advantages and disadvantages of each approach if it were to be applied to New Jersey. According to Avalere, New Jersey stands alone among all 50 states in requiring non-HMO plans to pay up to the OON charges for emergency services.

“Other states have addressed this major cost driver, it’s New Jersey’s turn to address this and get it right for our residents,” continued Marino. “Horizon will be sharing information about how the current out-of-network regulations are impacting all of us. And we will work closely with legislators as they look for ways to protect New Jersey residents from unreasonable and unnecessary health care costs.”

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