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Garden State Rejects Out-Of-Network Payment Limits

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The New Jersey Department of Banking and Insurance says a managed care company has taken the wrong approach to trying to control the cost of out-of-network care in in-network hospitals.

The department is preparing to impose a $9.5 million fine on Aetna Inc., Hartford, in connection with a letter Aetna sent to New Jersey health care providers in June.

Aetna told providers it would set a “fair payment” limit equal to 125% of the Medicare allowable amount for certain types of medically necessary care provided by doctors outside the Aetna provider network, and 75% of the Medicare allowable amount for lab fees and durable medical equipment.

The “fair payment” rule was supposed to apply to emergency care and other state-mandated services provided by out-of-network providers while a patient was admitted to an in-network hospital to services rendered as the result of a referral or authorization by Aetna, New Jersey regulators say.

Aetna told providers that “additional reimbursement would not be considered,” officials say.

In some cases, the rules led to patients receiving bills for amounts over what Aetna defined as the fair payment level.

In New Jersey, members of a health maintenance organization have the right to “be free from balance billing by providers for medically necessary services,” officials say.

New Jersey insurance regulators received complaints about the new Aetna payment rules, officials say.

Steven Goldman, New Jersey’s insurance commissioner, has signed an order that would require Aetna to eliminate the fair payment rule, reprocess all claims affected by the rule, and pay the affected providers the billed amounts along with 12% interest.

Aetna has 30 days to request an administrative hearing objecting to the order.

Aetna will be requesting a hearing, the company says.

“We believe that we are not only in compliance with New Jersey statutes, but that our policy protects our members and customers in the state of New Jersey from excessive billed charges by a small group of physicians who do not participate in insurer networks,” Aetna says in a statement about the proposed fine.

“We are concerned that this interpretation of the law by the state may encourage this small subset of physicians to drive up medical costs and insurance premiums in the state,” the company says. “It is our hope that we can work with the state to address any misunderstandings about the policy.”

Health finance experts note that insurers, employers and patients in many states have had concerns about anesthesiologists, radiologists and other specialists who work at hospitals that belong to various insurers’ networks but refuse to join the networks.

In California, for example, the California Association of Health Underwriters, Fresno, Calif., has lobbied for bills that would protect patients against unexpectedly large bills from out-of-network providers, who treat patients in hospitals that are in the patients’ health plan networks.


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