Key Requirements of The NJ Act
The NJ Act outlines new requirements that affect health care professionals in the following areas:
- Disclosure and notification: Health care facilities and providers must disclose information regarding network status, medical codes, and estimated fees to patients before scheduling nonemergency procedures or elective services.
- Balance billing prohibition: Facilities and providers may no longer bill patients for costs exceeding their in-network deductible, copayment, or coinsurance when billing for medically necessary urgent or emergency services or inadvertent OON services.
- Mandatory assignment of benefits: Whenever patients receive inadvertent emergency or OON services, it automatically results in the assigning of the benefits under the patient’s carrier to the OON provider with no further action required by the patient.
- Arbitration process: When carriers and providers disagree on an emergency or urgent medically necessary service or inadvertent OON service and the disputed amount exceeds $1,000, either party may initiate a binding arbitration process to resolve the issue if negotiations fail to resolve the payment dispute.
- Prohibition of cost-sharing waiver: No OON providers may waive or offer to waive all or a portion of a patient’s deductible, coinsurance, or copayment to induce them to choose medical care from that provider. The prohibition does not apply to activities falling under federal safe harbors, which are legal provisions designed to provide protection from liability when meeting specific conditions
As a critical tenet of the NJ Act, the Act prohibits providers from billing covered persons for inadvertent and/or involuntary out-of-network services for any amount above the amount resulting from the application of network level cost-sharing to the allowed charge/amount. See N.J.S.A. 26:2SS-7 to -9. Notably, covered persons cannot waive their rights under the NJ Act. Further, a provider does not render a covered person’s decision to proceed with treatment from a provider a choice that “was not made knowingly “simply by disclosing the provider’s network status. To the contrary, “Knowingly, voluntarily, and specifically selected an out-of-network provider” means that a covered person chose the services of a specific provider, with full knowledge that the provider is out-of-network with respect to the covered person’s health benefits plan, under circumstances that indicate that covered person had the opportunity to be serviced by an in-network provider, but instead selected the out-of-network provider. See N.J.S.A. 26:2SS-3. Accordingly, waivers provided to covered persons in situations where inadvertent and/or involuntary out-of-network services may be provided does not remove those services from the purview of the Act, and thus, providers must not balance bill covered persons for inadvertent and/or involuntary out-of-network services even if those covered persons sign waivers for, or consent to, those services.
Under the NJ Act, “Inadvertent out-of-network services” means health care services that are: covered under a managed care health benefits plan that provides a network; and provided by an out-of-network health care provider in the event that a covered person utilizes an in-network health care facility for covered health care services and, for any reason, in-network health care services are unavailable in that facility. “Inadvertent out-of-network services” shall include laboratory testing ordered by an in-network health care provider and performed by an out-of-network bio-analytical laboratory. See N.J.S.A. 26:2SS-3
While the provision of medically necessary services by an out-of-network urgent care or emergency facility clearly constitutes involuntary out-of-network services to which the arbitration provisions of the NJ Act (described below) will apply, importantly, any admissions into the same out-of-network facility resulting from the involuntary out-of-network services will also be subject to arbitration under the NJ Act up to the point when the covered person can be safely transported to an in-network facility, and including the means of transfer between facilities. Since all plans require providers and covered persons to notify the carrier within a certain number of days upon a facility admission, the carrier will have knowledge of such an involuntary out-of-network admission and be able to engage in utilization management. 6 If during such utilization management, the carrier authorizes a continued stay in the out-of-network facility past the date upon which the covered person can be safely transferred to an in-network facility, the services rendered after that determination will be considered an in-plan exception, and the services will not be subject to arbitration under the NJ Act. If the carrier does not authorize the continued stay in the out-of-network facility and requires transfer, but the covered person elects to stay at the out-of-network facility, the services rendered after the date of safe transfer would be considered voluntary out-of-network services and are not subject to arbitration under the NJ Act.
To the extent that the balance billing protections contained in the Federal Act extend beyond the state law balance billing prohibitions, the Department of Banking and Insurance has announced its intent to refer complaints or balance billing prohibitions to the federal Departments or relevant state regulatory agencies as appropriate.
As a general rule, an out-of-network health care provider shall not directly or indirectly, knowingly waive, rebate, give, pay, or offer to waive, rebate, give, or pay all or part of a covered person’s deductible, copayment, or coinsurance required under the person’s health benefits plan as an inducement for the covered person to seek services from such out-of-network health care provider. See N.J.S.A. 26:2SS-15. A pattern of waiving, rebating, giving, or paying all or part of the deductible copayment or coinsurance by a provider shall be considered an inducement.
An out-of-network health care provider may waive, rebate, give, pay, or offer to waive rebate, give, or pay all or part of a covered person’s deductible, copayment, or coinsurance required under the person’s health benefits plan only if:
- the waiver, rebate, gift, payment, or offer falls within any safe harbor under federal laws related to fraud and abuse concerning patient cost-sharing, including as provided in any advisory opinions issued by the Centers for Medicare and Medicaid Services or the Office of Inspector General relating thereto;
- the waiver, rebate, giving, payment, or offer thereof is not offered as part of any advertisement or solicitation; the out-of-network health care provider does not routinely waive, rebate, give, pay, or offer to waive rebate, give, or pay all or part of a covered person’s deductible, copayment, or coinsurance required under the person’s health benefits plan; and the out-of-network health care provider
- waives, rebates, gives, pays, or offers to waive rebate, give, or pay all or part of a covered person’s deductible, copayment, or coinsurance required under the person’s health benefits plan after determining in good faith that the covered person is in financial need; or
- fails to collect the covered person’s deductible, copayment, or coinsurance after making reasonable collection efforts, which reasonable efforts shall not necessarily include initiating collection proceedings.
The Federal Act requires that insurance cards issued to enrollees must have the following information:
- the applicable deductibles and out-of-pocket maximum limitations
- telephone number and website address for individuals to use in seeking Assistance. See 86 Fed. Reg. at 36,885. 5 See 86 Fed. Reg. at 36,877.
N.J.A.C. 11:22-8.3 contains certain similar requirements but will be amended to conform with the requirements in the Federal Act, including adding maximum out of pocket maximums and appropriate telephone and website address information. The Department has advised carriers to implement these requirements in good faith at the next opportunity to update Identification Cards.
The requirements contained in Bulletin 18-14 regarding self-funded opt-in information on the identification card remain operative. That Bulletin is linked here.
The NJ Act creates an arbitration process pursuant to N.J.S.A. 26:2SS-10. The Federal Act created a separate Independent Dispute Resolution (“IDR”) process that took effect January 1, 2022 and applies to nearly all private employer plans and individual insurance. Federal rules related to the IDR process, released on September 30, 2021, establish the federal IDR process that out-of-network providers, including facilities and providers of air ambulance services, plans, and issuers in the group and individual markets may use to determine the out-of-network rate for applicable items or services after an unsuccessful open negotiation.
Notably, the federal guidance permits the application of the New Jersey law as it relates to state-regulated plans and self-funded plans that opt-in to the state arbitration process. Therefore, the arbitration process established in the NJ Act will continue to apply to disputes relating to state regulated plans and self-funded plans that opt-in to the NJ Act. The state arbitration process under the NJ Act will continue as provided in Bulletin 18-14, while the federal IDR process will now apply to disputes relating to self-funded plans that did not opt in and in circumstances where the NJ Act does not apply.
Accordingly, a self-funded plan may continue to opt to be subject to the claims processing and arbitration provisions, as provided in Bulletin 18-14. A self-funded plan that previously opted into the New Jersey arbitration by filing an ID card with the Department may opt out of the NJ Act arbitration if it wishes to be subject to the federal IDR established under the Federal Act. If a self-funded plan wishes to opt-out of the NJ arbitration, notification should be sent to the Department at least two weeks in advance of such an opt-out taking effect. This informational filing should be submitted to the Department at the following email address: firstname.lastname@example.org.
With respect to out-of-network payment disputes between entities regulated under the NJ Act, such disputes continue to be subject to the state arbitration process. Any disputes between entities not regulated under the NJ Act, i.e., between a provider and a self-funded plan that has not opted-in to the NJ Arbitration provisions, and to services not covered by the NJ Act, i.e., air ambulance and services rendered out-of-state, may follow the federal IDR process.
Under the NJ Act, where carriers and out-of-network health care providers cannot agree upon reimbursement for services, an arbitrator will choose between the parties’ final offers. This is often referred to as “baseball or final offer arbitration” because the arbitrator must pick one or the other and cannot” split the baby” or settle somewhere in between the two offers. See N.J.S.A. 26:2SS-10. The rationale is that if both parties to the dispute understand these rules in advance, each will be reasonable in developing the offers to enhance the chances of the arbitrator selecting the offer.
Carrier Transparency And Disclosure Requirements
Broker Commission Disclosures Under The Federal Act
The Federal Act requires carriers offering individual health insurance coverage to disclose to enrollees prior to plan selection the amount of any direct or indirect compensation that the plan will pay to the agent or broker associated with that enrollment. This disclosure must also be included on any documentation confirming the enrollment. Issuers must also annually report this information to the Secretary of HHS. Such a requirement must be included in documentation to consumers as soon as possible after January 1, 2022. Each individual market carrier shall submit prior to sending to consumer a specimen of this disclosure document to the Department at the following email address: email@example.com
Transparency Under the NJ Act
The transparency provisions of the NJ Act apply to all carriers operating in New Jersey with regards to health benefits plans that are issued in New Jersey. Carriers are required to:
- maintain up-to-date website postings of network providers;
- provide clear and detailed information regarding how voluntary out-of-network services are covered for plans that feature out-of-network coverage;
- provide examples of out-of-network costs;
- provide treatment specific information as to estimated costs when requested by a covered person; and
- maintain a telephone hotline to address questions.
Attachment C to Bulletin No. 18-14 is a template Summary that carriers can use to provide the transparency disclosures required by the NJ Act.
The Summary contains the following specific disclosures:
- How the plan covers medically necessary treatment on an emergency or urgent basis by out-of-network health care professionals and facilities, also known as involuntary out-of-network services;
- How the plan covers treatment by an out-of-network healthcare professional for services when a covered person uses an in-network health care facility (e.g. hospital, ambulatory surgery center, etc.) and, for any reason, in-network health care services are unavailable or rendered by out-of-network health care provider in that in-network facility, including laboratory testing ordered by an in-network provider and performed by an out-of-network bio-analytical laboratory;
- That a covered person’s cost-sharing liability for inadvertent and/or involuntary out-of-network services is limited to the network level cost-sharing under the plan;
- A description of the ability of carriers to negotiate and settle with out-of-network health care providers to pay less than the amount billed for inadvertent and/or involuntary out of -network services, and how that settlement may increase the covered person’s cost-sharing liability above the amount indicated in the initial EOB;
- A description of the right of carriers and out-of-network health care providers to enter into binding arbitration for inadvertent and/or involuntary out-of-network services to determine the amount to be paid by the carrier for the such services where an agreement cannot be reached through negotiation and the provider does not accept the payment with the second EOB, including disclosures that the arbitration award will not increase the covered person’s cost-sharing liability above the amount in the second EOB;
- How all plans cover treatment from out-of-network health care providers if in-network health care providers are not available in accordance with the applicable network adequacy standards and that the ability to access a provider through a request for an in-plan exception. Note that the denial of such request is an adverse benefit determination subject to internal and external appeals as discussed in Attachment A;
- If the plan is a preferred provider organization plan (“PPO”) or point of service plan (“POS”) that covers treatment when a covered person voluntarily seeks to use out-of-network health care providers for the provision of covered services, known as voluntary out-of-network treatment, including: the cost-sharing applicable to voluntary out-of-network treatment and the carrier’s basis for calculating the allowed charge/amount;
- How to obtain more information from the carrier regarding whether a provider is in-network, examples of out-of-network costs, and how to estimate costs for out-of-network treatment for specific Current Procedural Terminology (“CPT”) codes; and
- The internet website address(es) and telephone hotline number maintained by the carrier to provide information on out-of-network coverage and issues.
Carriers that elect to create their own disclosures must ensure that the above elements are contained in the disclosures. Carriers are also required to maintain an internet website that provides:
- the same information as set forth above for each health benefits plan offered by the carrier in New Jersey. See N.J.S.A. 26:2SS-6;
- a clear and prominent disclaimer that any estimates or examples provided by the carrier for out-of-network costs do not take into account the amounts that the covered person may have already paid for their cost-sharing liability that accumulate toward the MOOP. See N.J.S.A. 26:2SS-6;
- a clear and prominent disclaimer that out-of-network arbitration is only mandatory with respect to services provided by a provider that is licensed or certified in New Jersey. See N.J.S.A. 26:2SS-3; and
- information that enables prospective members to calculate the anticipated out-of-pocket costs for voluntary out-of-network services in a geographical region or zip code. See N.J.S.A. 26:2SS-6(b)(4). The provision of CPT code-specific disclosures of out-of-network allowed charges/amounts are only required for current covered persons and may be placed on members only portions of the carrier’s website. See N.J.S.A. 26:2SS-6(b)(1), (2), (3), (5), and (7).
Carriers must also maintain a telephone hotline that is operated for at least 16 hours per day and staffed with at least one live representative capable of responding to questions about network status and out-of-pocket costs. See N.J.S.A. 26:2SS-6(b)(7).
The NJ Act has changed the landscape for OON medical practitioners regarding their billing practices and procedures. Carriers have also been impacted and need to assure claims payment practices in compliance with the NJ and Federal Acts, as applicable. Both constituencies need to be more knowledgeable and adept at identifying claims subject to the NJ Act and must comply with the time-sensitive requirements for handling these claims.
The time frames for negotiating and arbitrating surprise bill claims according to the statute specify that insurance carriers have 20 days to either pay the bill or notify the provider that the billed amount is excessive. The provider then has 30 days to dispute the proposed payment and negotiate a final reimbursement amount with the carrier.
In the event the payer and the provider are unable to resolve the payment amount, either party may initiate the “baseball-style” binding arbitration whereby the arbitrator must select one of the two final amounts submitted within 30 days.