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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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We’ve updated the MCMS Calendar with some upcoming events. Be sure to check them out and keep on the look out for more events to come…

In December the New Jersey Department of Banking & Insurance (DOBI) published a proposed regulation that would effectively regulate the fees of non-hospital healthcare providers who render services out-of-network. The complete proposal is posted on DOBI’s web site at: http://www.state.nj.us/dobi/proposed/prn06_405.pdf. Physicians who treat patients out-of-network need to evaluate the impact this proposal would have on their practice. Comments to the proposed regulations MUST BE sent to DOBI by February 16, 2007.

Mercer County Medical Society’s initial response to this proposal is to EDUCATE YOUR PATIENTS as to what is proposed. These cuts will not guarantee a reduction to a patient’s annual healthcare coverage premium. All the out-of-network providers should start advising their patients that the cost of care TO THEM will increase dramatically if these new regulations are adopted because the managed care company will now pay substantially less than the physician’s reasonable, customary and usual fee. The physicians should begin a letter campaign and provide patients with a letter to sign and send to DOBI. You can obtain an example letter HERE.

Concerned citizens and physicians should send letters to Commissioner Goldman, Governor Corzine and state legislators. The link for their addresses is here on our website’s sidebar. Healthcare leaders are meeting on Tuesday, January 9, 2007 in an effort to form a provider coalition to protect the rights of patients and physicians.