The Alliance for Quality Care, Inc.

JANUARY 23, 2010

Yesterday Governor Christie released his transition team subcommittee reports to the public. Of particular interest are the reports submitted by the DOBI and Health subcommittees. As you know, I was asked by Governor Christie to serve on the Health Subcommittee and honored to do so.

While bound by confidentiality restrictions, now that the reports have been made public I can update you. The reports deal with a number of topics, but of immediate interest is the unfair treatment of out-of-network ("OON") providers and ambulatory care facilities. Brach Eichler will be distributing a more in-depth analysis of these reports in a couple of days, but we wanted to reach out for you as soon as we could on some important policy issues.

It would be unprofessional to discuss the process pursuant to which the analysis on these issues came about and potentially disrespectful of the hard work that the committee and its chair put in. I was very impressed by the professionalism with which the business of the committee was conducted and the dedication of its members, staff and chair. However, I could not countenance, in any form or fashion, the analysis of OON providers and ambulatory care facilities contained in the report. The resemblance which it bears to the positions of the insurance and hospital industries is too strong. Suffice it to say that I requested that my name be removed from the report, which request was graciously granted by the committee chair. Further, Governor Christie has been made aware of my concerns.

The Health report identifies as one of the three major factors causing the poor financial condition of NJ hospitals "the proliferation of ambulatory care and ambulatory surgery centers in competition with hospitals without any obligation to care for the uninsured" and that ambulatory care facilities have "siphoned paying patients away from hospitals." The Health report also identifies as significant healthcare policy issues "leveling the playing field" and "the out-of-network problem." Upon reading these two phrases we at Brach Eichler think of leveling the playing field between healthcare providers and insurance companies and, regarding "the OON problem," the various threats (both in terms of insurance company business practices and regulatory schemes) to the right and ability of providers to go OON -- and survive OON. Very few healthcare providers, and virtually no small healthcare providers, possess any leverage to negotiate rates with insurance carriers. The only leverage is to not participate. When we hear "OON problem" we think about any reduction or tampering with this precious and exceedingly limited leverage.

Unfortunately, the Health report goes in another direction and makes the following recommendations to the Governor: (i) DOH should explore capping OON charges and prohibiting waiver of co-payment amounts; (ii) ambulatory care facilities should have the same regulatory requirements as hospitals; (iii) ambulatory care facilities should have to report cost and quality data similar to hospitals; (iv) list prices charged to uninsured patients should be made public; and (iv) the ambulatory care facility assessment should be increased. The report fails to mention anything positive about ambulatory care facilities, patient freedom of choice, or the fact that physicians provide charity care services without recompense every day, etc., etc., etc..

The DOBI report was equally anti-OON. The DOBI report noted "the explosion" of ASCs in the state and that "providers moving OON will put inordinate strain on the healthcare market place." The report also knocked the recently enacted assignment of benefit legislation, noting that the new law "will leave no incentive for providers to remain in-network, as higher rates will be guaranteed." If only that were true. There was no analysis in the report of in-network provider reimbursement levels or what percentage of providers are actually OON, let alone any discussion or consideration of the overall provider environment in New Jersey versus other states.

The DOBI report also admonishes the new administration to be "vigilant of Legislative initiatives to redefine how the the [PIP] fee schedule is calculated." We can tell you there will be no such attempt that we are aware of. There will be an attempt, however, to get DOBI to calculate fees as currently required by law.

Transition committees play an important role in the transition of governing from one administration to another and I was honored to be part of the process. However, they do not serve in a policy making capacity. That function rests with Governor Christie and the Legislature.

The Christie campaign was very fair, open minded and interested in what the provider community's issues were. I was and continue to be very impressed by the these folks and how they handle themselves and conduct business. Over the last couple of years the provider community has worked hard, with some success, to advance its agenda and to retard the agenda of those trying to harm us. That hard work must and will continue. With a new Governor and new leadership in the Legislature the transition committee reports serve as a reminder that the interests adverse to ours are significant and far reaching. We remain optimistic, however, that Governor Christie, Senate President Sweeney, Speaker Oliver and the rest of the leadership in the Legislature will maintain open minds and a continued willingness to "hear our case." In this regard we look forward to continuing the fight, side by side with you.