In New Jersey, one small drafting loophole in a state insurance regulation meant to protect consumers from "surprise bills" has instead given some hospitals the opportunity to turn providing out-of-network care into a money-making enterprise.
When patients need emergency care, the last thing on their minds is whether the nearest provider is in their network. Many have wound up dunned with huge surprise medical bills from an unexpected trip to the ER in a process called "balance billing"—when a provider that doesn't accept a patient's insurance attempts to collect the difference between their charge and the insurer's reimbursement from the patient.
According to the Kaiser Family Foundation, 13 states have put provisions in place to protect these consumers. The regulations restrict balance billing; in New York's case, starting in 2015, providers must notify patients before treatment if they don't take their insurance, and in cases when they don't, patients will only have to pay their regular co-pay as if the provider were in-network.
In New Jersey, hospitals have found a way to profit from the state regulation. New Jersey requires insurers to pay for emergency treatment at facilities where their coverage isn't normally accepted—but the state doesn't cap the size of the bills that hospitals send to the insurers.
The result? Hospitals like Bayonne Medical Center, which turned a $17-million operational profit within two years of a 2008 takeover. Bayonne ended its contracts with several of the state's largest insurers and reaped the benefits of earning the higher out-of-network rates.
And just how big are these out-of-network bills? According to data provided by Aetna to NorthJersey.com, pretty huge. These figures represent sample charges from Bayonne and its two sister hospitals, known collectively as CarePoint Health, to Aetna from January 1, 2013, to January 31, 2014.
Critics and insurers say this billing policy will lead to higher premiums for consumers overall, ultimately hurting the patient. A spokesperson for Aetna, for example, said that since turning to a for-profit model, several hospitals in the state "have driven up costs for all of Aetna’s New Jersey members, conservatively, by a total of $15 million each year."
Bayonne, for its part, makes no bones about the billing strategy, placing the blame for the hospital's high prices on insurers' "greed." According CarePoint, the hospitals had no choice: The widespread demand from payers for care discounts is what has caused many hospitals' financial woes. Reimbursement, Bayonne says, isn't sufficient to cover hospitals' costs.
"[Insurers] alone are responsible for corrupting the American health care system, not Bayonne or other urban hospitals fighting for their lives," wrote Bayonne's CEO and chairman last year.