Senate Bill 1742 – Requires healthcare providers participating in payor networks to provide notice to covered individuals of a provider’s referral to an out-of-network provider.

Senate Bill 1743 – Provides that the waiver, rebate or payment of an insurance deductible, co-payment or co-insurance by a provider is a form of insurance fraud and would be subject to criminal and civil penalties.

On behalf of the Radiological Society of New Jersey and New Jersey Association of Ambulatory Surgery Centers, I attended the Senate Commerce Committee hearing regarding the above-captioned bills on May 27, 2010. The hearing room was packed with representatives from the insurance industry and provider community. Although the hearing went from 10:00am to noon, and from 2:00 to 3:00pm, only two witnesses testified. The first witness was Senator Vitale, co-sponsor of the bills, and representatives from the Department of Banking and Insurance.

The testimony I intended to present was that a waiver of a co-pay should not lead to criminal sanctions because this bill would, in effect, prevent a physician from waiving the co-pay to the physician’s relative. A physician should have the discretion to waive a co-pay without regard to financial hardship. The criminalization of waiving co-pays on a case-by-case basis is extremely punitive and goes beyond any rational attempt to reign in costs. Finally, the request of an advisory opinion from the US Secretary of Health and Human Services in order to routinely waive co-pays could not be obtained since the opinion request would apply to commercial insurance.

Senator Gill seemed to be very concerned that the waiver of co-pays is fraudulent and gives rise to an increase in health insurance premiums. At approximately 3:00pm, the hearing was abruptly adjourned by Senator Gill which is good news for providers as I believe that the Senator realized that she did not have enough votes on the Committee to release the bill to the Senate. The bill is expected to be further amended before it comes before the Committee again. We will be involved in this amendment process.

This further attack on out of network providers has our full attention.

Should you have any questions, please feel free to contact John D. Fanburg, Esq. at jfanburg@bracheichler.com or at 973-403-3107.