Doctors, health plans against pay rule proposed in New Jersey

It doesn't happen often, but for once physician and insurer associations are in agreement on something.

Both groups are against a proposed New Jersey regulation that would tie out-of-network reimbursement to Medicare rates in the hope that patients could more easily find out what such care costs.

The proposed amendment to New Jersey Dept. of Banking and Insurance regulations would allow employer group health plans with 51 or more employees to pay no less than 150% of the Medicare amount in physicians' claims for out-of-network, nonhospital services.

The idea behind the plan is not so much about setting pay as it is about making reimbursement more transparent, said agency spokesman Jim Gardner. With out-of-network reimbursement tied to Medicare, consumers could go to Medicare's Web site and calculate how much out-of-network care costs.

The comment period for interested parties to speak for or against the regulation lasts until April 2. Neither the Medical Society of New Jersey nor the New Jersey Health Plan Assn. is for the proposal.

The medical society says the 150%-of-Medicare minimum is just as good as telling insurers that's the maximum they have to pay.

The proposal also caps the patient's share of the bill at no more than 40% of the plan's rate.

Out-of-network rates vary by insurers, but the society says in most cases 150% of Medicare would represent a reimbursement cut.

"It's a whacko deal," said Michael Kornett, chief executive officer and executive director of the Medical Society of New Jersey. "The only ones that benefit are the managed care companies. They claim this is going to help physicians because it sets the floor for what is being paid, but really it's a de facto ceiling."

Proponents of the proposed regulation say that Medicare's rates are published whereas private insurance plan rates are generally not posted. Gardner said the idea for the regulation came from staffers who were researching efforts by health plans to alter their out-of-network benefits.

"The purpose of this is to provide some transparency in the system so that patients would have a better idea of what the out-of-pocket expenses would be ... It's not going to affect what doctors can charge," Gardner said.

But physicians say that is not true. If physicians try to make up any insurer's cut by charging patients the difference, that puts them in the difficult position of either looking greedy in their patients' eyes, or spending more time and money collecting directly from patients, not an easy task to begin with.

Charles Moss, MD, president of the Medical Society of New Jersey and a vascular and general surgeon in Hackensack, said the proposed regulation would effectively force physicians back into networks as they see their incomes decline and their cost for collecting payments increase.

"It's really designed to save the insurance company more," Dr. Moss said. "They'll be paying less. It makes our fees look outlandish. It sets a horrendous precedent that a state government can set your fees, in a sense."

That is a potential precedent the New Jersey Health Plan Assn. says it will not accept, as well. Wardell Sanders, president of the state's health plan trade organization, said his group didn't seek the new regulation and will not support it.

"The association supports the right to use the Medicare fee schedules to determine out-of-network benefits, but will oppose the [proposed] regulation," Sanders said. "Market forces and what employers are demanding is probably a better way to calculate how the plans are developed. The plans would like to see no change from what is happening right now. They see this as a limiting act on health plans."

Sanders also said plans also would not automatically drop out-of-network rates to the minimum 150% of Medicare if the regulation is approved.

The Dept. of Banking and Insurance extended the comment period to April from January because of the strong comments made by physician and health plan organizations.

After the comment period ends, the department can decide whether to implement the new regulation, scrap it, or modify it.