Doctors, health plans against pay rule proposed in New Jersey

A state agency wants to tie out-of-network reimbursement rates to Medicare. Physician and health plan associations oppose the move.

By Jonathan G. Bethely, AMNews staff. Feb. 12, 2007.

It doesn't happen often, but for once physician and insurer associations are in agreement on something.

Both groups are against a proposed New Jersey regulation that would tie out-of-network reimbursement to Medicare rates in the hope that patients could more easily find out what such care costs.

The proposed amendment to New Jersey Dept. of Banking and Insurance regulations would allow employer group health plans with 51 or more employees to pay no less than 150% of the Medicare amount in physicians' claims for out-of-network, nonhospital services.

The idea behind the plan is not so much about setting pay as it is about making reimbursement more transparent, said agency spokesman Jim Gardner. With out-of-network reimbursement tied to Medicare, consumers could go to Medicare's Web site and calculate how much out-of-network care costs.

The comment period for interested parties to speak for or against the regulation lasts until April 2. Neither the Medical Society of New Jersey nor the New Jersey Health Plan Assn. is for the proposal.

The medical society says the 150%-of-Medicare minimum is just as good as telling insurers that's the maximum they have to pay.

The proposal also caps the patient's share of the bill at no more than 40% of the plan's rate.

Out-of-network rates vary by insurers, but the society says in most cases 150% of Medicare would represent a reimbursement cut.

"It's a whacko deal," said Michael Kornett, chief executive officer and executive director of the Medical Society of New Jersey. "The only ones that benefit are the managed care companies. They claim this is going to help physicians because it sets the floor for what is being paid, but really it's a de facto ceiling."