NJ amends arbitration process for out-of-network medical costs

New Jersey Senate Bill 1177, which amends the arbitration procedures required under the Out-of-Network Consumer Protection, Transparency, Cost Containment, and Accountability Act, has been signed into law.

The New Jersey Surprise Bill Act enacted in June 2018 sought to enhance consumer protections for New Jersey residents by providing greater transparency and disclosure by health insurance carriers for patients receiving inadvertent, out-of-network emergency care. The law created an arbitration system to resolve out-of-network payment disputes and sought to protect consumers from certain surprise out-of-network bills.

One of the main objectives of the original bill was to protect New Jersey residents from what is called “balance billing” for inadvertent, out-of-network emergency care. Balance billing is when a health-care provider bills a covered person for the difference between the provider’s charge and the amount the carrier allows for that charge.

“This bill strengthened protections for patients who receive out-of-network care either inadvertently or in response to a medical emergency,” state Sen. Vin Gopal, D-Monmouth, a primary sponsor, said in a statement. “In 2018, the New Jersey Legislature passed the ‘Out-of-Network Consumer Protection, Transparency, Cost-Containment and Accountability Act’ in response to estimates that New Jersey residents incurred $420 million in ‘surprise’ medical bills every year.”

Similar federal legislation was subsequently passed in Congress and signed into law under the Consolidated Appropriations Act at the end of 2020—called the No Surprises Act. Health-care providers and insurers in New Jersey had already been subject to most of the provisions of the substantially similar federal law.

The amendment, signed into law by Gov. Phil Murphy on July 29, revised arbitration procedures for health insurance carriers subject to the act. In addition to Gopal, the legislation was sponsored by Sen. Joseph A. Lagana, D-Bergen/Passaic, and Assemblyman Craig J. Coughlin D-Middlesex.

Murphy’s office declined to comment on the amended legislation.

Under the now-amended version of the law, an insurance carrier or health-care provider will have 60 days instead of 30 days in which to negotiate a settlement for inadvertent out-of-network services. And the carrier, provider, or covered person may now initiate binding arbitration within 60 days of a final settlement offer.

“S1177 builds on the safeguards established in that act by closing loopholes carriers could use to avoid arbitration on out-of-network medical costs,” Gopal said in his statement. “This legislation takes another step toward ensuring New Jersey residents aren’t forced to shoulder onerous medical debt due to circumstances beyond their control.”

Arbitrators, under the amended law, must include detailed, written findings with their decision, including an analysis of the decision and any information or documentation which contributed to the decision. Also included were amendments to the financial requirements for initiation of arbitration. The difference between a carrier’s and provider’s final offer and bill amount must be $1,000 or higher for a billed amount of $2,500 or more, and $500 or higher for a billed amount of $2,500 or less.

Related: Healthcare.gov insurers denied 1 in 5 of all in-network claims in 2020

“The committee amended the bill to remove a provision requiring arbitrators to be certified by the Department of Banking and Insurance; thereby preserving the requirement under current law that arbitrators be certified by the American Arbitration Association,” according to the Senate Commerce Committee statement on the bill, dated May 16, 2022.

Coughlin said in a statement: ”As with any law, it needed an update to account for the reality that providers and carriers could use more time to initiate arbitration or negotiate a settlement. Senator Lagana had long championed this fix and I’m pleased to help get it over the goal line.”