Christie Uses Line-Item Veto to Cut Charity Care, Nursing Facility Rates

The 2017 New Jersey state budget was signed into law on June 30, but not before Governor Christie wielded his veto pen to cut expenditures for charity care, nursing facilities and family planning services, among other items. The budget, effective July 1, reduces the charity care funding pool from $502 million to $302 million. Although the majority of the $200 million cut was included in the governor’s February funding proposal, $50 million of that sum fell victim to the governor’s line-item veto authority after legislators, prompted by hospital advocacy groups, had restored it to the final budget bill shortly before its passage.

Also vetoed from the final budget was $10.5 million for an increase in the per-diem rate for nursing facilities and $7.5 million for family planning services.

New Jersey’s teaching hospitals, however, fared better, with an increase in general education funding of $60.7 million, expanding the allotment from $127.3 million to $188 million.

Amended Version of Out-of-Network Bill Clears Assembly Committee

The Assembly Financial Institutions and Insurance Committee approved on June 20 legislation intended to protect consumers from surprise out-of-network medical bills. The bill, A1952, would require hospitals and doctors to disclose to patients before treatment whether they are participants in the patient’s insurance network. More controversially, the bill also would establish a state-regulated arbitration process to settle disputed bills to insured individuals who incur out-of-network charges during emergency or urgent procedures, or “inadvertently” during elective procedures.

When patients receive an emergency or elective procedure, they may encounter facilities, physicians or specialists that are not participants in their insurance network. At times, the patient receiving the services may not be aware of the identity of the out-of-network provider or facility until treatment is imminent or already under way. Currently, such out-of-network providers can balance bill the patient for all charges not reimbursed by the consumer’s insurance carrier.

The measure is the latest legislative attempt to address surprise medical bills, an effort that has been mired in gridlock for over eight years due, in part, to stiff opposition from the hospital and physician communities.

The primary source of misgivings is the proposed mandated arbitration mechanism, which would limit disputed reimbursement to a range between 90 percent and 200 percent of Medicare rates. This represents a departure from previous versions of the bill that permitted both providers and insurers to propose a  reimbursement amount and vested an arbitrator with the authority to determine the appropriate charge.

Mishael Azam of the Medical Society of New Jersey argued that Medicare is an inappropriate benchmark because Medicare rates are a “moving target, and federal law is changing as we speak … into bundled payments and value payments.” Moreover, added Azam, Medicare rates always fall short of what it costs a doctor or a hospital to treat a patient.

John Azzariti, president of the New Jersey State Society of Anesthesiologists, voiced his concern that the bill would allow insurance companies to “dictate our reimbursement, much like Medicare.” Asserting, “It’s not sustainable to maintain a practice under those conditions,” Azzariti predicted the bill would force physicians to relocate their practices out of state.

On the other hand, the bill was praised by Maura Collinsgru of N.J. Citizen Action as a solution to “[s]urprise bills … driving up the cost of insurance and unfairly penalizing New Jerseyans who do all the right things – buying insurance and using in-network providers.”

Horizon echoed this sentiment, stating, “Given that Horizon has the largest network of any provider and covers just under half the residents, doubling that number provides a reasonable estimate of what out-ofnetwork providers charged all New Jerseyans in 2015. The roughly 80 percent of New Jersey physicians and 92 percent of hospitals that participate in Horizon’s network are not the problem. The problem is the relatively small, but very expensive, group of providers choosing to remain out-of-network in order to exploit loopholes in the law and charge outrageous prices to patients who, very often, have no role in choosing that provider and no recourse once a bill arrives.”

With stakeholders at loggerheads, the bill’s future is uncertain.