FLURRY OF PROPOSED REGULATIONS AND LEGISLATION LIKELY TO CREATE NEW HARDSHIPS FOR PHYSICIANS
By: Steven I. Kern
The new year has gotten off to a bad start for most New Jersey physicians. Regulators and legislators are seeking to eliminate traditional reimbursement formulas, prohibit co-management of patients, restrict physician-owned, single operating rooms, and yet again redefine appropriate business practices. A copy of each of the proposed regulations and legislation can be found at the Kern Augustine Conroy & Schoppmann website www.drlaw.com. For more information, contact Steven Kern directly at sikern[at]drlaw.com.
USUAL CUSTOMARY AND REASONABLE B NO LONGER?
A proposed regulation by the NJ Department of Banking and Insurance (DOBI) could force many out-of-network physicians and facilities to close their doors. The proposal would limit the amount of money a third party payor would have to pay out-of-network providers to 90% of Medicare’s reimbursement rates and eliminate the traditional Usual Customary and Reasonable reimbursement formula.
Specifically, the proposal would require carriers to recognize charges by out-of-network providers only up to 150% of Medicare’s reimbursement rate. It would also allow carriers to require patients to pay up to 40% of the allowable amount. As such, the carrier would only be responsible for 60% of the 150% recognized, or 90% of the Medicare charge. The out-of-network physician or facility would then have to collect the 40% co-payment from the patient, along with any charges which exceed 150% of Medicare.
The practical implication of this regulation, if adopted, is that most physicians and facilities would be unlikely to be able to balance bill patients much beyond 150% of Medicare and that reimbursement rates for out-of network services would be severely eroded. Of note is the fact that hospital reimbursements are specifically excluded from the proposed regulation.
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