Consumer out-of-pocket spending on health care costs, including “surprise” medical bills – often incurred for costly, out-of-network care — is on the rise and state lawmakers are responding with legislation to protect consumers.
Surprise bills happen when consumers receive unexpected charges for medical care that they assumed would be comprehensively covered by their insurance plans. This often occurs when consumers unknowingly receive services from providers or facilities that are not covered within their insurance network, such as a specialist who contracts to work in a hospital, but does not participate in that hospital’s network.
Surprise bills can leave consumers on the hook for up to thousands of dollars in unexpected medical costs. This issue is pervasive throughout the health care system and affects consumers regardless of whether they are covered through individual insurance markets, such as an Affordable Care Act marketplace, or their employer. (For background on surprise billing, read NASHP’s report Answering the Thousand-Dollar Debt Question.)
Generally, state laws that address surprise billing fall into four categories:
- Laws that cap or limit charges for services that are delivered out-of-network, especially for emergency care;
- Laws designed to improve cost transparency in service costs and/or provider networks;
- Laws that set up an arbitration process to resolve surprise bills that focus on achieving a resolution between providers and insurers without burdening consumers); and
- State investments in committees to study the impact of surprise billing on state consumers.
Several states took action during the 2018 legislative session to address surprise billing, ranging from New Jersey, whose new law captures most of the above strategies, to California, New Hampshire, and New York, which passed laws to restrict “balance billing” (when providers charge patients for the difference between for what they charge and the insurer’s allowed amount.)
Below is a summary of new state laws designed to protect consumers from surprise bills.
- California AB 2593: California took aggressive action in 2017 to curb surprise billing in the state and its newest law adds to those protections by prohibiting air ambulance providers from charging consumers more than in-network costs, even if the consumer receives services from an out-of-network air ambulance provider. (It is currently awaiting governor’s signature)
- Missouri SB 982: The law requires insurers to pay providers for all emergency services “necessary to screen and stabilize an enrollee” and any additional services authorized by the insurer. Consumers cannot be held liable for cost-sharing for these services, beyond what is allowed under their insurance plans, even if the provider is out-of-network. The law also outlines a specific process for arbitration between insurers and providers to settle costs owed in cases where out-of-network care is provided to consumers.
- New Hampshire HB 1809: This law prohibits specific providers (those performing anesthesiology, radiology, emergency medicine, or pathology services) from balance billing a consumer for services in cases where the provider is out of the consumer’s network but delivers services at a hospital or ambulatory surgical center that is in the consumer’s network. New Hampshire also passed a law to establish a committee to study the balance billing practices of ambulance providers in the state. A report on the committee’s findings is due Nov. 1, 2018.
- New Jersey Chapter 32: This is of the most comprehensive surprise billing laws drafted to date. It requires:
- Health care facilities to provide clear and public information regarding the insurance plans it contracts with, the network status of providers who provide services in that facility, and the costs of services in that facility;
- Providers to share information about the insurance plans they participate in and the health care facilities they are affiliated with;
- Insurers to update and maintain accurate information about their provider networks; and
- Insurers to provide consumers with clear information regarding out-of-network health care benefits.
The law also prohibits out-of-network balance billing in the case of emergency services and sets up a process of arbitration for insurers and providers to resolve billing disputes. Notably, the law includes provisions that attempt to guarantee similar protections for consumers covered by self-insured plans, over which the state has limited authority.
- New York Chapter 57: The state’s Health and Mental Hygiene Budget includes a provision to protect survivors of sexual assault from being balance billed by a hospital, a sexual assault examiner, or a licensed health care provider.
- Oregon Chapter 43: By July 2020, Oregon’s Department of Consumer and Business Services will provide a report to the state legislature on all consumer complaints received by the state related to out-of-network providers working at in-network facilities.
Other states have actively considered bills to outlaw surprise bills and additional legislation is expected during the 2019 legislative sessions. The National Academy for State Health Policy (NASHP) will continue to monitor these bills and other efforts to address surprise billing.
On the federal level, in mid-September a group of nonpartisan US senators unveiled a draft bill that also tackles surprise billing. It adds a cap on out-of-network billing rates, prohibits surprise billing in emergency situations, and requires patients to receive notice before they receive out-of-network medical care.
New Jersey Medicaid Medical Home Demonstration Project
New Jersey’s governor signed P.L. 2010, c.74 into law in September 2010 to establish a three-year medical home demonstration. The legislation, unanimously passed by the legislature, directed the Division of Medical Assistance and Health Service (DMAHS) to develop the demonstration in partnership with the state’s Medicaid managed care organizations (MCOs).
In accordance with that legislative requirement, New Jersey’s contracts with each of the state’s four Medicaid managed care organizations (MCOs) now include several requirements related to building medical homes. These requirements took effect on July 1, 2011 and are to last until June 30, 2014. According to the contract, medical home services include:
“Care-coordination through multi-disciplinary teams;
Care of enrollees with chronic diseases and the elderly;
Patient or family education for enrollees with chronic diseases;
Oral health examinations; and
Culturally and linguistically appropriate care.”
New Jersey’s Medicaid MCOs are required to develop medical home payment models and then seek approval from DMAHS. They are also required to use National Committee for Quality Assurance (NCQA) medical home recognition criteria to qualify practices and to regularly evaluate their programs. The medical home projects are to be guided by the Joint Principles of the Patient Centered Medical Home. New Jersey anticipates that approximately 25,000 Medicaid beneficiaries will receive medical home services under the pilots from a diverse array of provider types. The state is encouraging MCOs to focus on practices that care for frail elderly beneficiaries and others with chronic health conditions, behavioral health conditions, and/or developmental disabilities. A November 2012 report to the legislature provides an update on MCO efforts to implement medical homes as of that date.
Other activity of note in New Jersey, as detailed in this report, includes:
The establishment of behavioral health home pilot sites for Medicaid beneficiaries (pages 74-75); and
Legislation and planning related to the establishment of accountable care organizations for Medicaid beneficiaries (pages 76-83). For more information on Medicaid ACOs in New Jersey, visit the New Jersey page of NASHP’s State Accountable Care Activity Map.
- New Jersey has received a planning grant from the Centers for Medicare & Medicaid Services (CMS) to develop a state plan amendment to implement Section 2703 of the Affordable Care Act (ACA), establishing health homes for Medicaid enrollees with chronic conditions. To learn more about Section 2703 Health Homes, visit the CMS Health Homes webpage.
- New Jersey is one of seven markets participating in CMS’s Comprehensive Primary Care Initiative (CPCi). In this multi-payer initiative, Medicare is collaborating with public and private insurers in the selected states or regions with the goal of strengthening primary care. In New Jersey, CPCi launched in November 2012, bringing together five payers, as well as 71 participating primary care practices with 272 providers across the state.
Last updated: April 2014
New Jersey Medicaid Medical Home Demonstration Project: P.L. 2010, c.74 directed Medicaid to consult with Medicaid managed care organizations (MCOs) in establishing a medical home demonstration.
|Defining & Recoginizng a Medical Home||
New Jersey Medicaid Medical Home Demonstration Project: P.L. 2010, c.74 defined the medical home model as, at a minimum, including, “a multi-disciplinary team that provides patient-centered care coordination through the use of health information technology and chronic disease registries across the patient’s life-span and across all domains of the health care system and the patient’s community.” The legislation further specified that health centers may be considered primary care providers.
New Jersey’s contract with Medicaid managed care organizations (MCOs) specifies that the MCO demonstration projects are to be executed in accordance with the Joint Principles of the Patient Centered Medical Home.
New Jersey Medicaid Medical Home Demonstration Project: The Medicaid MCO medical home pilots must use the National Committee for Quality Assurance (NCQA) standards for practice recognition. All practices must achieve NCQA Level 1 recognition by the end of year 1 and NCQA Level 2 recognition by the end of year 2. See page 440 of the MCO contract for further details.
Comprehensive Primary Care Initiative (CPCi): Practices were selected for participation in CMS’s Comprehensive Primary Care Initiative through a competitive application process. Under CPCi, practices are not required to attain formal PCMH recognition; however, formal PCMH recognition through NCQA, AAHCC, the Joint Commissioner, URAC, or a state-based recognition program was viewed favorably in practice selection. Additional criteria included:
|Aligning Reimbursement & Purchasing||
New Jersey Medicaid Medical Home Demonstration Project: Each of the four New Jersey Medicaid managed care organizations (MCOs) is administering its own medical home pilot, and information is not available on the specific payment methodologies that each MCO will use to pay medical home-recognized practices. The MCO contract states that each MCO must submit its proposed reimbursement methodology to the state for approval. It also requires the methodologies to “support care coordination and reward quality and improved patient outcomes.”
Comprehensive Primary Care Initiative (CPCi): This four-year multi-payer initiative, launched in November 2012, includes six payers in the New Jersey market: Medicare, Amerigroup, AmeriHealth New Jersey, Horizon Blue Cross Blue Shield of New Jersey, and UnitedHealthcare.
Medicare pays selected practices a per-beneficiary per-month (PBPM) risk-adjusted care management fee, which ranges from $8 to $40. CMS has indicated that it expects care management fees to average $20 PBPM during the first two years of the initiative. In Years 3 and 4, care management fees will average $15 PBPM. Medicare will also introduce a shared savings component beginning in Year 2, calculated at the market level.
The CPCi solicitation for payers indicates that participating payers (non-Medicare) are expected to follow a similar framework, paying per-member per-month (PMPM) care management fees to participating practices on top of fee-for-service and incorporating a shared savings component. Payment amounts will be negotiated individually with participating practices to comply with anti-trust laws.
New Jersey Medicaid Medical Home Demonstration Project: According to New Jersey’s Medicaid managed care contract, Medicaid managed care organizations (MCOs) are to evaluate their medical home demonstrations using the following criteria:
Reports are to be made to the Division of Medical Assistance and Health Service (DMAHS) annually.
- As of July 1, 2011, there were 1,098,608 beneficiaries enrolled in the state’s Medicaid program, 853,645 of whom were enrolled four Medicaid-only MCOs (as of September 2014, five MCOs participate in the state’s Medicaid program).
- Physical, behavioral, and oral health benefits are provided to Medicaid beneficiaries through the state’s Family Care managed care program. Outpatient substance abuse serves are carved out of managed care and provided on a fee-for-service basis.
- Transportation benefits are provided to 853,645 Medicaid enrollees through a Prepaid Ambulatory Health Plan.
- In 2012, New Jersey received approval for a Section 1115 Demonstration that consolidated its existing managed care programs, as well as four existing home and community-based service waivers.
New Jersey defaults to the federal definition of medical necessity for the EPSDT benefit. The state does not have a formal state-level medical necessity definition for Medicaid, deferring to clinical judgment and industry best practices. In discussing Medicaid-covered services, the New Jersey Administrative Code (N.J.A.C. 10:49-5.1) notes that:
“Any service limitations imposed will be consistent with the medical necessity of the patient’s condition as determined by the attending physician or other practitioner and in accordance with standards generally recognized by health professionals and promulgated through the New Jersey Medicaid program.”
|Initiatives to Improve Access
Providers in New Jersey are paid a $10 incentive payment for each documented EPSDT screening examination.
|Reporting & Data Collection||
New Jersey has in place a performance-based incentive program for managed care organizations (MCOs). MCOs earn back an amount withheld from their capitation payment based on performance on maternity care and prevention screening measures; the latter category includes a measure of the percentage of Medicaid enrollees aged 3-17 who have evidence of a body mass index percentile documentation.
MCOs must also report annually on a set of HEDIS performance measures that include:
Children receive behavioral health assessments as part of well-child visits. The New Jersey Department of Human Services provides an approved screening tool (Section B.4.9 of the managed care contract appendices) to be used on children when an indication of a potential behavioral health issue is uncovered.
|Support to Providers and Families||
Support to Families
Managed care organizations are required to notify families of upcoming well-child visits according to the state periodicity schedule. They are also responsible for conducting outreach to families if appointments are missed and notifying primary care providers when children are overdue for well-child visits.
Support to Providers
Medicaid provider communications on policy changes and policy manuals are collected on the state Medicaid agency’s website.
New Jersey has in place a Medicaid medical home demonstration project. Managed care organizations (MCOs) are required to participate in the project, which includes the use of multi-disciplinary teams to coordinate care for Medicaid beneficiaries. The Medicaid agency provides flexibility in the payment methodology used by MCOs to support the medical homes but require that the MCOs “submit payment methodologies for review … that support care coordination and reward quality and improved patient outcomes.”
MCOs are also tasked with coordinating care and service delivery with a variety of community-based organizations and agencies, including:
MCOs must also maintain systems dedicated to coordinating physical and behavioral health services for enrollees.
New Jersey is also launching a Medicaid Accountable Care Organization (ACOs) demonstration that will allow regional ACOs to participate in a shared savings model and coordinate services for Medicaid beneficiaries, including children.
Managed care organizations must develop dental provider networks that include safety net dental providers, including:
Patient Population: Each organization applying for certification as an Accountable Care Organization (ACO) must cover “a municipality or defined geographic area in which no fewer than 5,000 Medicaid recipients reside.” All Medicaid beneficiaries within an ACO’s defined geographic range are eligible to receive services from the ACO, though Medicaid beneficiaries may seek care outside of the ACO.
Scope of Services: P.L. 2011, Ch. 114 does not identify a scope of services that ACOs must include. However, the state’s approved 1115 waiver request to CMS specifies that ACOs will provide access to all services available under the State Plan. ACOs are expected to be integrated into their communities so that they can assist in coordinating community-based services for enrollees. Regulations issued in 2013 specify that the demonstration’s objectives include increasing access to primary care, behavioral health care, pharmaceuticals and dental care.
Provider population: ACOs are required to obtain the support of all general hospitals in the designated area, at least 75 percent of the primary care providers in the designated area, and at least four qualified behavioral health providers in the designated area (including at least one Department of Human Services-licensed mental health program and one Department-licensed substance abuse program).
The New Jersey Medicaid Accountable Care Organization (ACO) Demonstration Project was authorized by the passage of P.L. 2011, Ch. 114. The statute specifies that the New Jersey Department of Human Services will establish the demonstration in consultation with the state’s Department of Health and Senior Services.
In the authorizing legislation, New Jersey’s legislature announced its intent to “exempt activities undertaken pursuant to the Medicaid ACO Demonstration Project that might otherwise be constrained by State antitrust laws and to provide immunity for such activities from federal antitrust laws through the state action immunity doctrine.”
The authorizing legislation, P.L. 2011, Ch. 114, states that any organization applying for certification as an Accountable Care Organization (ACO) must have a governing board which includes:
Organizations that apply for certification as ACOs are required to have board representation that includes representatives of local hospitals, physicians, behavioral health care providers, and dentists.
Statute requires that organizations applying to act as ACOs be “organized with the voluntary support of local general hospitals, clinics, pharmacies, health centers, qualified primary care and behavioral health care providers, and public health and social services agencies.”
|Criteria for Participation||P.L. 2011, Ch. 114 defines minimum standards for Accountable Care Organization (ACO) demonstration applicants:
The New Jersey Department of Human Services will approve gainsharing plans submitted by applicant Accountable Care Organizations (ACOs) with input from the state’s Department of Health and Senior Services and assistance from Rutgers Center for State Health Policy. Gainsharing plans must promote “improvements in health outcomes and quality of care, as measured by objective benchmarks as well as patient experience of care; expanded access to primary and behavioral health care services; and the reduction of unnecessary and inefficient costs associated with care rendered to Medicaid recipients residing in the ACO’s designated area.”
Under the gainsharing plan, a percentage of the cost savings achieved by an ACO will be distributed to the ACO. P.L. 2011, Ch. 114 establishes that “Savings shall be calculated in accordance with a methodology that:
The state’s legislation indicates that data analysis will be performed by the Rutgers Center for State Health Policy. The Center’s proposed methodology for calculating savings was released in May 2012, with a final recommended methodology published in July 2012.
Managed care organizations in the state may also choose to contract and establish a plan for gainsharing with ACOs participating in the Medicaid ACO pilot. Regulations issued by the Department of Human Services in April 2013 anticipate that ACOs may negotiate different savings allocations with different managed care organizations.
The 2013 regulations clarified that ACOs may seek to pursue shared savings in phases. They may focus the shared savings on a specific spending area (e.g. diabetes treatment) in the first year of the project, but by the end of the demonstration period the ACO’s gainsharing plan must identify savings for all Medicaid costs within the designated geographical area.
|Support for Infrastructure||Infrastructure supports have not been detailed by the state at this time.|
|Measurement and Evaluation||
Section 9 of P.L. 2011, Ch. 114 states that the state’s Department of Human Services “shall evaluate the demonstration project annually to assess whether: cost savings, including, but not limited to, savings in administrative costs and savings due to improved health outcomes, are achieved through implementation of the demonstration project” and “to assess whether there is improvement in the rates of health screening, the outcomes and hospitalization rates for persons with chronic illnesses, and the hospitalization and readmission rates for patients residing in the designated areas served by the ACOs.” The Rutgers Center for State Health Policy will provide outcome evaluation data.
New Jersey specified in its 1115 waiver request that evaluation criteria for ACOs would align with the state’s Section 2703 health homes initiative, including measures for rates of health screening, outcomes of hospitalization rates for persons with chronic illnesses and the hospitalization and readmission rates for patients residing within the ACO service area.
In regulations issued in April 2013, the Department of Human Services established that ACO gainsharing plans must select at least five quality measures related to chronic conditions that each participating practice will use and report on, as well as one prevention measure. These include a mix of preventive, at-risk population, appropriate use of providers, and access to care measures. The list of quality metrics produced by the state also includes mandatory measures.
This paper summarizes the results of a conference in Albany, New York in November 1994 that brought together representatives from the four current and former “all payer” rate setting states of Maryland, Massachusetts, New Jersey and New York.
State-based prospective hospital rate setting has declined from its former position as “the center of the policy paradigm for controlling health care costs” that it held in the 1970s. In 1980, about 30 states had some form of payer or budget regulation of hospitals; today, only six maintain any form of mandatory rate setting or budget controls: Florida, Maine, Maryland, New York, Rhode Island, West Virginia; Arizona and Vermont maintain voluntary systems.
This report, prepared by NASHP for the federal Agency for Healthcare Research and Quality, summarizes how leading states analyze state and federal race/ethnicity data in strategic plans and reports aimed at reducing racial and ethnic disparities in health status and health care. It features Colorado, Connecticut, Georgia, Maryland, New Jersey, New Mexico, Rhode Island, and Utah, but also notes activity in Arizona, California, Massachusetts, Michigan, North Carolina, Ohio, and Virginia. Lessons from leading states can provide guidance for others exploring ways to launch or enhance health equity, consumer engagement, quality improvement, or cost containment initiatives.
Read full report here.
This report summarizes how leading states that participate in the Healthcare Cost and Utilization Project (HCUP) and their clients use hospital discharge data on patient race/ethnicity to inform state health care disparities reduction activities. The report features California, Florida, Massachusetts, Rhode Island, and Wisconsin HCUP Partners, but also notes activity in Connecticut, Georgia, New Jersey, and South Carolina. Partner States’ experiences demonstrate that patient race/ethnicity data are an important tool for informing state initiatives and producing policy- and practice-relevant publications to support health equity.
|State Use of Hospital Discharge Databases to Reduce Racial & Ethnic Disparities.pdf||204.8 KB|
New Jersey’s HIT targets include: improving quality of care for Medicaid recipients; improved chronic and preventive care; reducing medication errors; coordinating and integrating care/improving access to clinical information; quality monitoring and program improvement; improving efficiency and saving costs for Medicaid agencies; clinical data HIE; better automation of the prior approval process; improved quality measurement and reporting; improved detection of fraud, abuse, and inappropriate care; reduction in medication costs through electronic drug list access and generic substitution; using administrative data to improve provider efficiency and effectiveness; coordination with public health efforts to ensure accurate and efficient population tracking and monitoring; and using the Medicaid Managed Care contracting process to promote HIT and HIE.