In two separately filed lawsuits in New Jersey over the last two years, insurers have attacked hospitals and physicians for out-of-network claims. In 2009, Horizon Blue Cross Blue Shield of New Jersey filed two lawsuits against two separate hospitals — Bayonne (N.J.) Medical Center and Newton (N.J.) Memorial Hospital — over billing practices at the facilities. In March of this year, Aetna filed suit against six New Jersey out-of-network physicians, alleging that charges for services provided were unconscionable and excessive.
Jacqueline B. Penrod, Esq., of Semanoff Ormsby Greenberg & Torchia in Huntingdon Valley, Pa., has been following and commenting on the Aetna lawsuit. She discusses the importance of this latest lawsuit over out-of-network charges on New Jersey and national providers.
Q: What is the significance of this lawsuit on New Jersey and national providers, and consumers?
Jacqueline Penrod: The case is worth some attention for all providers because, if it proceeds to discovery and/or there are motions argued, it will offer some additional guidance about the manner in which out-of-network claims are billed and paid.
Out-of-network legal issues have been bubbling up in New Jersey, as your publication noted in its coverage of HealthNet v. Garcia. This case is a bit different because it appears to focus on provider charges, as opposed to a waiver of patient coinsurance/deductibles; it alleges some common law theories in addition to statutory assertions. The excessive charges alleged in this case may bring renewed attention to the waiver issue, however, becuase if a provider can waive coinsurance, charges for services could be increased with less concern about having to bill patients.
For consumers, it could serve to call attention to a difficult problem: Even if you choose an in-network facility, you could be placed in a position to pay at an out-of-network rate for some of the physician charges. Typically, physicians do disclose their status (at least for elective admissions), but it can present a difficult choice for patients.
Q: Considering these lawsuits, how would you advise providers address out-of-network billing?
JP: Non-participation is a decision that must be assessed on a case-by-case basis and legal advice would be correspondingly tailored. As a general rule, I encourage providers to try and work with a payor before making the decision to withdraw from a provider network. If that is not possible, providers must consider their payor mix and where they fit as a provider within the network. If the decision to drop out of a network is made, providers should inform patients that they are out-of-network before the services are rendered.
An additional concern is the contract between the health insurer and its subscriber. These contracts may include a provision that services where coinsurance/deductibles are waived will not be considered covered services. When patients are informed about the provider's status, they should also be advised that they will be required to pay their share, pursuant to their health plan's requirements.
Providers should seek legal guidance before making the decision to drop out of network.
Q: Do you anticipate seeing more lawsuits like the Aetna case?
JP: That's a difficult call. Each state's insurance laws may differ slightly, so payors would likely evaluate the market before proceeding. I would not be surprised to see more cases in New Jersey, given past activity.
Learn more about Semanoff Ormsby Greenberg & Torchia.
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