Proposed Changes to New Jersey’s Out-of-Network Transparency Act

For more information about this blog post, please contact Khaled J. KleleRyan M. MageeLabinot Alexander Berlajolli, or Brianna J. Santolli.

A bill, S3458, is currently being proposed in the State Senate. This proposed statute amends the arbitration provisions of the Out-of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act. Besides increasing the time frames for when parties can attempt to reach a settlement before initiating arbitration, the proposed statute eliminates the requirement that the final offers submitted by the insurer and provider be more than $1,000 apart.  The proposed statute also eliminates the clause requiring the arbitrators to be from the American Arbitration Association. Instead, the Department of Health will certify arbitrators.

Importantly, the proposed statute eliminates the requirement that the “arbitrator's decision shall be one of the two amounts submitted by the parties as their final offers and shall be binding on both parties.” Instead, under the proposed statute, the “arbitrator shall determine a usual, reasonable, and customary fee that shall be one of the two amounts submitted by the parties,” although there is no explanation as to how the proposed language changes the outcome of the initial language.

To determine the usual, reasonable, and customary fee, the provider is required to submit his or her usual and customary fee by providing explanations of benefits from insurers showing the provider’s billed and paid fee. The arbitrator will then determine the reasonableness of the provider’s fee by comparison of the provider’s experience to providers in the area.  If a database is used, the provider and insurer shall both identify the database used, the edition date, the geozip, and the percentile.  The arbitrator must also consider as evidence of reasonableness prior arbitration awards submitted by either party.

The proposed statute still seems to require the arbitrator to select one of the two final offers, but it does not explain what happens if the arbitrator determines that both final offers are not the usual, reasonable, and customary fee.