The following editorial on healthcare policy by Senator Robert Singer was published by the Asbury Park Press on March 9, 2017:
With much discussion focused on possible federal changes to the Affordable Care Act, it’s critical for state policymakers and residents to be aware of several other potential issues that could impact the quality, cost or access to health care for New Jersey residents.
Here are three to watch:
1. Impact of Horizon’s OMNIA Plan on Community Hospitals
Horizon Blue Cross and Blue Shield of New Jersey recently launched a new line of insurance policies called OMNIA.
When customers covered under OMNIA seek non-emergency hospital services, they are directed to access one of about three dozen preferred hospitals in the state that have signed deals with Horizon.
In exchange for using this limited network of “Tier 1” hospitals — as Horizon calls them — patients pay lower premiums and other out-of-pocket costs.
Hospitals covered by the “Tier 1” designation generally are those associated with larger hospital networks, such as RWJBarnabas and Hackensack Meridian Health.
Most other hospitals in the state, including many smaller hospitals in urban and rural areas, have been designated as “Tier 2” by Horizon. Patients covered by OMNIA who access one of those hospitals for anything other than emergency treatment will pay more than they would at a “Tier 1” hospital.
When OMNIA was launched, Horizon estimated that 250,000 New Jerseyans would select the new plan, including 40,000 uninsured residents who couldn’t afford other alternatives.
While increasing access to lower cost health insurance is certainly positive, we also must be aware of the potential consequences of this arrangement. Due to the scale of Horizon’s business, the designation of a hospital as “Tier 1” or “Tier 2” under OMNIA may determine whether a smaller hospital can survive.
Many hospitals designated as “Tier 2” have warned that Horizon’s redirection of hundreds of thousands of patients to other facilities will hurt them financially — and even may put them out of business.
Ultimately, it seems likely that the rise of plans like OMNIA will give insurance companies the power to determine which hospitals can survive. Many of our local community hospitals may not make the cut.
Policymakers must address whether we are comfortable with this arrangement of allowing insurance companies to determine which hospitals are forced to close.
2. Impact of Purchasing Insurance Policies Across State Lines
There has been much talk about the possibility of lowering healthcare costs by opening up state insurance markets to allow residents to purchase policies available in other states.
Generally, each state imposes its own regulations and mandates on the health insurance plans offered for sale to its residents.
A plan offered by an insurance company in New Jersey, for example, may be required by the state to cover a certain prenatal test or surgical procedure, which may not be required by the laws or regulations in another state, such as Pennsylvania.
A notable exception, however, applies to the self-insured plans that cover the employees of many larger companies. Under the federal Employee Retirement Income Security Act of 1974 (“ERISA”), those self-insured plans are not subject to state coverage mandates since they are not purchasing insurance.
One likely impact of opening up state insurance markets would be a reduction in the impact of the various state coverage requirements that many today take for granted. Plans offered under such a scheme would likely resemble the self-insured plans governed by ERISA, which are subject to lesser federal minimum coverage requirements.
Additionally, an insurer based elsewhere would likely lack an extensive network of providers in New Jersey — further limiting customers’ choices. Increasing competition in this fashion may lead to lower premium costs, but the trade-off may be a loss of coverage for certain services or reduced access to preferred doctors.
3. Impact of Legislation Addressing Out-of-Network Fees
Some health specialists, including many anesthesiologists, for example, do not participate in any insurance plan. As a result, many New Jerseyans with health insurance are surprised when they receive surprise medical bills after hospital treatment from facilities that are in-network.
Even though the hospital itself may have been covered by their plan, one or more of the doctors who provided treatment may not accept their insurance. A bill moving through the Legislature would create a binding arbitration process to resolve disputed bills that arrive for out-of-network care.
Struggling hospitals have warned that the provisions of the legislation would force them to offer emergency treatment at a loss, which would not be sustainable, and likely would reduce access to specialists who offer critical services. Specialists have warned that the bill would limit reimbursements for services offered in New Jersey to a fraction of already low Medicare rates, driving them to practice in other states.
As with other potential reforms, consumers should be aware that the cost of preventing surprise bills may be fewer local hospitals and reduced access to specialists.