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CONTENTS

As Investors Buy Struggling Hospitals, Big Change Comes to New Jersey Healthcare

How Will Sale of Saint Michael’s Transform Healthcare in Newark?

Rise of ‘Telemedicine’ Drives Move Toward Multi-State Nursing Agreement

Out of Network Dispute to Return: Couglin Says He’s Ready to Unveil Revamped Bill

In-House vs. Outsourced Medical Billing: Pros and Cons

Four New Jersey Hospitals Among Nation’s ‘Most Connected’, U.S. News Says

Menendez Urges Congress to Halt Medicare Premium Hike

N.N. Hospitals Reach Benchmark in Leapfrog’s C-Section Ratings

N.J. Health Center Scores Among Highest in Nation for Higher Than Average Hospital Infections

September 2015

Hospital Rounds

As investors buy struggling hospitals, big change comes to New Jersey health care By LINDY WASHBURN Bayonne Medical Center wasn’t just bragging about efficiency when it posted a big digital clock on a highway billboard a few years ago to show the real-time waits in its emergency room. It wanted patients to come to its ER. Lots of patients. The For-Profit Prescription It didn’t matter if the hospital was in the patient’s insurance network. On the contrary, to the businessmen who had recently purchased the medical center, those “out-of-network” patients held the key to reversing Bayonne’s fortunes. These owners, who bought the hospital in bankruptcy, had found an unintended — and very profitable — consequence to a state regulation that was designed to protect patients with urgent medical needs. While the regulation required insurance companies to pay for emergency treatment at hospitals where their coverage wasn’t normally accepted, it did nothing to control the size of the bills the hospitals could submit to those insurers. And that loophole enabled Bayonne, which had ended its contracts with some of the state’s largest insurers, to charge those higher out-of-network rates. The result was striking: The strategy contributed to a $17 million operational profit within two years of its 2008 takeover. This tactic offers one vivid example of the effects of a continuing evolution in New Jersey’s health care industry, where struggling non-profit hospitals, some on the verge of closing, are being eyed as potential money-making enterprises by for-profit companies eager to extend their reach in the state. Institutions that only recently were worth little have become lucrative takeover prizes. Bayonne was one of the first to make the change. But after several pending sales are completed, one in six of the state’s 72 hospitals will be run by health care entrepreneurs and investors — from a cardiologist who reputedly spent his boyhood in a village in India without electricity to the founders of a company known for an online gang warfare game — rather than the traditional religious and non-profit organizations. These forces — in a state that has never blocked a hospital purchase by a for-profit company — could define New Jersey’s health care landscape for decades. But with this remarkable transformation comes a host of unanswered questions that get at the heart of the mission of health care. Questions like: Are hospitals so important to a community that their preservation is worth tradeoffs, including some of the highest ER bills in the country and higher insurance premiums as well? Should the state exert greater oversight of for-profit operators, as Connecticut and Massachusetts have done, or would that deter investors who may be the last salvation for shaky institutions? Can businesspeople, some with no prior hospital experience, be trusted to focus on the health care needs of their patients, rather than the financial bottom line, in a world that relies so heavily on federal and state tax dollars? And, do deep-pocketed insurance companies, accused of making outsized profits for years, deserve some protections, too — if only to insulate their customers from even higher premiums in the future if some for-profit hospitals continue to bill the insurers at such high rates? Indeed, critics of this billing strategy warn that it could lead to higher insurance premiums for everyone in New Jersey, where residents are already paying the 10th highest rates in the country — a 50 percent increase in eight years. “The major change we see when there’s a conversion to for-profit health care is an increase in charges,” said Bradford H. Gray, a senior fellow at the Urban Institute, a Washington, D.C., think tank. Meanwhile, the drumbeat of acquisitions continues. This month, St. Mary’s Hospital in Passaic became part of a California chain. The former Pascack Valley Hospital in Westwood is now operating as a for-profit business, though it is affiliated with the non-profit Hackensack University Medical Center. Meadowlands Hospital Medical Center in Secaucus went private in 2010 and promptly turned an $11 million profit in its first year. The company that bought Bayonne Medical Center has since acquired two more hospitals in Hudson County. Sales in rural Sussex and urban Essex counties await state approval. Several hospitals, including Pascack Valley and Bayonne, have undergone striking upgrades. Others have skewed their services to more profitable specialties like high-tech imaging or weight-loss surgery; one dropped maternity. Many cut staff and hours. Meadowlands sold off its land to a Canadian company and now leases it back. All of them now pay local property taxes. Such changes don’t necessarily mean that the level of care in these institutions will drop — or rise, for that matter. Bayonne, for example, has added cancer and cardiac programs and opened a free clinic for the uninsured that has kept hundreds of patients out of the hospital. It eventually became part of the network of the state’s largest insurer but remains out-of-network for others. Meanwhile, Meadowlands is filling less than a quarter of its 230 beds.

4 New Jersey Physician

Just as in the non-profit hospital world, experts say, the quality of for-profit hospitals runs the gamut from good to bad. Sticker shock Nowhere have these changes been more provocative, or consequential, than in the guerrilla warfare going on between the state’s fledgling for-profit hospitals and its decades-old insurance powerhouses over the sticker price of care — and how much the insurers should be expected to pay. Oddly enough, the impetus for the fight is the well-intended rule, crafted by the state Insurance Department years ago, to protect patients. At the time, no one thought that it would trigger such a fierce fight over money or that a new group of private hospital entrepreneurs would use it as a tool to help their bottom line. Essentially, the rule says that patients cannot be penalized when they go to the nearest hospital in an emergency, such as a heart attack. Even if the hospital is not part of their insurer’s network, and therefore has no contract that sets what the insurer must pay for various types of care, patients can’t be asked to pay any more than if they had gone to a hospital within their network. But the insurance companies did not get the same protection. The hospitals can bill them anything. To settle a bill with an out-of-network hospital, insurers have to pay the balance of the hospital’s much higher sticker price — after the patient covers the deductible or any copayments for care — or negotiate a reduction. And while those sticker prices are the starting point for the negotiations — and don’t reflect the amount the insurers will ultimately pay — the hospitals see them as a quick jolt to their revenues. By starting so high, insurers say, the hospitals gain an edge in those discussions, an edge the non-profits have not chosen to exploit. In its short existence as a for-profit hospital, Bayonne Medical Center’s sticker prices for nearly all of the 50 most common diagnoses have become among the highest in the nation. It charged one insurer $36,300 to treat a migraine in its ER, another $8,200 to bandage a finger. Bayonne’s leaders make no apologies for those numbers. In fact, they applaud them. The hospitals blame what they call the insurers’ greed for their decision to pursue this strategy. Insurers’ demands for deep discounts from hospitals that are part of their networks caused the financial troubles at these facilities in the first place, leading to the need for such takeovers, the hospitals say. The insurance reimbursements simply did not cover the hospitals’ costs. “They alone are responsible for corrupting the American health care system, not Bayonne or other urban hospitals fighting for their lives,” Mark Spektor, Bayonne's CEO, and Daniel Kane, its chairman , wrote last year. “Both not-for-profit and for-profit hospitals must make money, because otherwise you have no money to invest back in your infrastructure,” Spektor said in a later interview. But it’s more than insurers who will suffer the consequences of this kind of thinking, said Ward Sanders, president of the New Jersey Association of Health Plans, which represents the insurance industry. “It will break the bank of anyone who pays for health care in our state: consumers, small business, unions and taxpayers,” he said. The Insurance Department rule “is very well-intentioned and works well so long as hospitals don’t exploit it,” Sanders said. “Most don’t, but over the past few years we’ve seen a select few just simply take advantage of this rule. I think you could argue that, ironically, a rule designed to protect consumers is doing an awful lot to hurt them now.” Aetna, for example, said the exorbitant bills at Bayonne and its sister hospitals — now known as CarePoint Health — have resulted in higher insurance premiums for all of its 1.1 million customers statewide, most of whom have never set foot in those facilities. “Over the last three years, certain hospitals in Hudson County — since turning to a for-profit model and exiting insurer networks — have driven up costs for all of Aetna’s New Jersey members, conservatively, by a total of $15 million each year,” said Susan Millerick, a spokeswoman. While the direct impact on each policyholder may be largely invisible — Millerick called it “modest” — she said it is a cause for concern because the costs could escalate each year. The three CarePoint hospitals billed $129,984, on average, for a hip fracture — nearly 10 times the $13,502 Medicare sets as a reasonable price, Aetna officials said, providing an analysis of their claims data for 2013 and January 2014. An uncomplicated newborn delivery at two of the CarePoint hospitals — Christ Hospital in Jersey City and Hoboken University Medical Center — led to an average bill of $42,118, more than 10 times Aetna’s typical in-network payment of $4,150. In all, Aetna said, CarePoint billed it $27.2 million for treating 316 Aetna members who arrived at the emergency room — an average of $86,000 each. The average bill for a visit to the ER, without being admitted to the hospital, was $16,500. Aetna declined to reveal what it actually paid to settle those claims. Carl King, the head of the company’s national network, would only say that those final payments “are often six to nine times more than at in-network facilities” — and sometimes even “a much higher multiple.” Other out-of-network hospitals do not charge the insurer such high amounts and receive less in final payments, Aetna said. Even beyond the escalating cost of insurance policies, patients have to absorb higher prices if their insurance policies require October 2015

them to pay a high deductible and a percentage of hospital costs. For example, a patient with a $2,000 deductible and 20 percent copay will owe thousands of dollars more if the hospital bills $9,000 than if it bills $400 for the same, simple procedure. Exacerbating the concern of some patients, Meadowlands Hospital Medical Center caused an uproar by directly billing them for claims they thought had been settled through their insurance. In January, for example, Meadowlands told one man with UnitedHealthcare insurance that he owed $89,494 for two cortisone injections that United had paid at its in-network, negotiated rate of $2,848. Meadowlands said its contract with United was not valid after the new owners took over, and it was therefore billing him at the much higher, out-of-network rate, according to court papers. It also told a Rutherford couple with United insurance that they owed $33,000 for the birth of their child, which they thought had been covered by their insurer. The hospital hired a collections firm to dun United’s members for similar charges. Overall, Meadowlands claimed that United owed it more than $200 million, in a letter from its attorney to United. The insurer took the hospital to court and in February a judge barred further collection efforts; the case is in arbitration. But the hospital is counting on settlements with United and two other insurers to improve its bottom line, according to a report by its consultant that was filed recently with the state. A similar dispute between Meadowlands and Aetna was resolved only after the Insurance Department stepped in to review complaints by Aetna members about high bills they’d received from the hospital. In that case, Meadowlands claimed Aetna owed it $39 million. In a court-approved settlement, Aetna paid an undisclosed amount. Meadowlands signed a contract to become part of the insurer’s network. “This is a brilliant, brilliant financial windfall for anyone who is smart enough and has the funding” to buy a hospital, said Assemblyman Gary Schaer, a Passaic Democrat. “But it seems to me that our system is being totally undermined.” St. Mary’s Hospital, which is in Schaer’s district, may soon head down the same path. Even before Prime Healthcare Services, a national for-profit chain, won state approval to take over the hospital, St. Mary’s announced plans to terminate contracts with United and Cigna if negotiations over new rates were not satisfactory. Not all for-profit hospitals bill as much as Bayonne or Meadowlands when they don’t have contracts with certain insurers. Financial strategies among those institutions can vary as much as the institutions themselves. Indeed, in New Jersey’s new world of hospital management, everything, it seems, is up for grabs — from how insurers and patients are billed to what kinds of services are being offered to who owns t he buildings. Insurers, hospitals do battle Hospitals can bill insurance companies high charges for patients who are treated or admitted through the emergency room if the arepart the of starting pointnetwork. to negotiate the amount the insurer pay. These are sample charges hospital is not the insurer’s The charges are the starting point will to negotiate the amount the insurer will pay. These are sample charges three Care-Point Health in Hudson County to Aetna Jan.from 1, 2013, Jan. 31, 2014. fromfrom the the three Care-Point Healthhospitals hospitals in Hudson County tofrom Aetna Jan.to 1, 2013, to

Jan. 31, 2014.

Diagnosis Length of stay Fracture Less than 24 hours Migraine/other headaches Less than 24 hours Acute bronchitis Less than 24 hours Uncomplicated pregnancy Two days Kidney stones Two days Uncomplicated pregnancy Three days Fractures Three days Asthma Four days Pneumonia Four days Alcohol abuse Six days

Source: Aetna 6 New Jersey Physician

Average charges to Aetna

Average Medicare reimbursement

$48,936

$6,900

$36,299

$3,575

$29,749

$4,124

$37,891

$4,150

$50,058

$5,673

$53,160

$5,438

$129,984

$13,502

$105,619

$6,214

$127,667

$9,251

$102,324

$9,813

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How Will Sale of Saint Michael’s Transform Healthcare in Newark? Andrew Kitchenman The answer lies with the Christie administration and which of several competing options it decides to pursue Gov. Chris Christie’s administration has put off for nearly three years deciding what it should do about the future of healthcare in Newark. But the scheduled sale of the bankrupt Saint Michael’s Medical Center, one of five Newark hospitals, should force a decision. The outcome of the sale will likely help shape the quality of healthcare that Newark residents receive, according to industry attorneys and analysts. It could also affect the financial stability of all of the city’s hospitals. State involvement in hospital bankruptcies normally is limited to issues related to operating licenses. But not in this case, for three reasons: First, the New Jersey Health Care Facilities Financing Authority, which is chaired by Acting Commissioner of Health Cathleen Bennett, issued tax-exempt bonds for Saint Michael’s that currently total roughly $230 million. Second, the state also owns another troubled Newark facility -- University Hospital, which is facing millions of dollars in annual operating losses for the foreseeable future. Third, if the state allows the sale of Saint Michael’s it should get a short-term financial shot in the arm. But if were to decide to take over the facility, it could realize a greater payback over a longer period. For nearly three years, California-based for-profit hospital chain Prime Healthcare has sought to buy Saint Michael’s for $49 million. But the sale has been delayed as the state Department of Health considered whether to approve the transfer of the hospital’s license. It can do this through the certificate of need, or CN, process, which allows the state to determine whether changes in hospital operation or ownership serve residents. Saint Michael’s executives tried to force the state’s hand and push through the sale to Prime by pursuing Chapter 11 bankruptcy. The deadline to submit bids to buy the hospital is November 3. If there’s more than one bid, there will be an auction, scheduled for November 5, with the bidding opening at Prime’s offer of $49 million. The hospital board would then meet to choose what best offer and notify U.S. Bankruptcy Court Judge Vincent F. Papalia of its decision. But the state could pursue ownership of the hospital and ask another hospital chain to operate it. Robert Malone, a corporate-restructuring lawyer who’s not involved in the Saint Michael’s case, noted that the bankruptcy code includes a provision that could allow a bidder that doesn’t submit the highest offer to win. “The judge has to look at not the highest but what is the best offer,” said Malone, a partner in Drinker Biddle & Reath’s Florham Park office. The outcome is important for the financing authority. If the hospital were to be sold, then the authority would be able to use the money to pay off a portion of the remaining $233 million in debt – or $49 million if Prime wins. But the benefits of this cash infusion would be short-lived. The state would still be responsible for paying the remainder of the bonds. If Prime wins with its current offer, the bond payments would be roughly $16.75 million annually beginning in roughly three years, until the approximately $184 million to $190 million remaining is paid off in 2039. Observers say that the state has another option. It could take control of Saint Michael’s itself, ask another hospital system to operate the facility, and use revenue from that operator to pay off the outstanding bonds. The legal grounds for such an action is that the hospital building is essentially the collateral on the debt that the state issued for Saint Michael’s benefit. There are risks to such a move, since it’s not clear how much revenue the hospital would generate. But it’s possible that it would provide much more revenue over a longer period of time than a sale. There is a precedent for such a move right next door, where the Dormitory Authority of the State of New York took over the assets of Interfaith Hospital last year when it was in bankruptcy. It then leased the hospital building. As expensive as Saint Michael’s bonds could be to the state, they pale in comparison to the potential annual losses related to University Hospital. Consider this: If no changes are made to Newark hospitals, their annual operating losses are projected to reach to $191 million by 2019, according to a report from Chicago-based Navigant Consulting that was commissioned by the financing authority. If no changes are made, the losses could fall particularly hard on University, which the state has a long-standing commitment to operate. This would be particularly true if both Saint Michael’s and East Orange General Hospital are operated by for-profit companies, not likely to incur annual operating losses, according to Renee Steinhagen, executive director of New Jersey Appleseed Public Interest Law Center. But Navigant recommended an alternative scenario, in which Saint Michael’s, Newark Beth Israel Medical Center, and East Orange October 2015

General Hospital are converted into outpatient facilities -- essentially closing as full-service, acute-care hospitals. In-patient services would be consolidated in an expanded University Hospital. This would translate into a $64 million profit in 2019. The state could pave the way for such a scenario by taking control of Saint Michael’s, according to Steinhagen. Once it did so, it could issue a request for proposals to lease the facility to another hospital operator, such as one of the several nonprofit systems that operate in North Jersey. Steinhagen is concerned that Christie might decide against intervening, since the heaviest financial losses from the bonds and to University Hospital would occur after his term ends in January 2018. “The bill comes due after he’s out of office -- but from the taxpayers’ perspective, the taxpayer is still bearing the brunt,” said Steinhagen, who said she intends to convey her concerns to the administration. Saint Michael’s executives reject Navigant’s findings. They say that maintaining hospital competition actually keeps costs down and ensures more services than if a regional giant like Barnabas Health were operating nearly all Newark hospitals. They also question the projections that Navigant made that went into the report, saying that it assumes steep declines in the need for inpatient beds that haven’t yet materialized. Michael Sirota, a lawyer representing Saint Michael’s in bankruptcy court, said the very fact that Prime has pursued the hospital “completely undermines the integrity of that report,” since the for-profit company sees an opportunity in a city where Navigant projects heavy financial losses. He has said that the bankruptcy process is designed to lead to expedited sales, as the hospital treads a fine line between arguing for bankruptcy and that it has a positive economic future. “You can get experts to write on any topic, but the market has spoken,” said Sirota, a member of the law firm Cole Schotz in its Hackensack office. Sirota is deeply skeptical of any potential state attempt to assume control of the hospital. “I’ve never seen the financing authority or the state of New Jersey bid and acquire for its own portfolio a hospital,” he said. “I don’t know where the state or a financing authority will get the financing to operate this hospital as an owner, so that’s a hypothetical that’s completely new to me.” Prime has committed to investing $25 million into the hospital, keeping all 1,400 of its workers, and maintaining all of its services for five years. But critics question its long-term commitment to maintaining services that aren’t profitable, alleging that it could potentially offload them onto already financially ailing University Hospital. While Steinhagen argues that it makes financial sense for the state to pursue control of Saint Michael’s, she feels that an even more important reason for state control is the potential benefits to the quality of care that patients receive. “The more that these hospitals coordinate -- which is not something you can do with everybody vying for services that produce revenue -- the quality is not going to improve,” she said. “This is about financial viability of all of the hospital sand it’s about quality and improving access to care in the city of Newark.” Another wild card in the outcome is the position of Barnabas, the largest hospital system in the state. It’s indicated an interest in pursuing a bid. But Barnabas’s pursuit has its own complications. As the owner of Newark Beth Israel and nearby Clara Maass Medical Center in Belleville, a successful Barnabas bid could face a review by the Federal Trade Commission to ensure that it’s not creating an anticompetitive situation. Robert McCann, another Drinker Biddle & Reath partner not involved in the case, said the many factors in the case complicate any decision by the FTC. On the one hand, Barnabas’s market share would normally draw the interest of the FTC. On the other hand, the commission normally stays out of consideration of bankrupt hospitals, since a hospital whose losses outstrip its revenue normally isn’t a factor in competition. But the regulators’ interest perks up when there’s an auction drawing multiple bidders -- particularly if one bidder is seen as potentially seeking to close a hospital to block out the ownership of a rival. In addition, if the state would make a strong statement about its interest in the case, “the federal government is typically going to be somewhat deferential to the interest of the state,” said McCann, who has extensive experience in hospital antitrust cases and is a partner in his firm’s Washington, D.C., office. McCann said the case is unique, with the actions of a U.S. bankruptcy judge (“There’s really nobody more powerful in our judicial system than a bankruptcy judge,” McCann said) squaring off with a powerful federal agency. “I’ve never seen a square intersection of a bankruptcy judge and the FTC, but I can’t imagine it would be without fireworks,” he said, summing it up: “It’s very messy it’s a fascinating case.” Saint Michael’s board, with its history of preferring that Prime buy the hospital, could reject a Barnabas offer even if it was the highest bid. It could then ask Papalia to approve the sale to Prime even if it wasn’t the highest offer, based on the argument that a bid that doesn’t depend on FTC approval is the “best” offer.

10 New Jersey Physician

While Sirota declined to speculate on the particular hypothetical scenario of Barnabas submitting the highest bid, he added that any bid contingent on making it through an FTC review would be met with skepticism by Saint Michael’s board. He said Prime’s bid has no such contingency. “Imagine the officers and directors electing to go forward with a contingent bid and lose a contingency-free bid and for some reason the contingent bid doesn’t close -- that would be you know an embarrassment,” he said. Regardless of the outcome of the bankruptcy process – and whether the state seeks control of Saint Michael’s – the administration would still have final say. That’s because of the CN process overseen by the Department of Health, as well as the responsibility of the attorney general to determine whether the conversion of a hospital from nonprofit to for-profit status is in the public interest. If the state were to deny a license to Prime, that could spark a legal appeal, and the bankruptcy sale could be back at square one, with the possibility of the judge requiring a second auction, and a different buyer than the first time through the process.

Rise of ‘Telemedicine’ Drives Move Toward Multi-State Nursing Agreement Andrew Kitchenman State lawmakers, nursing groups want to make sure NJ health-safety standards are maintained This scenario could happen as soon as next year: A nurse is treating a patient in New Jersey, and the nurse isn’t even in the room – or even in New Jersey. There’s a nationwide effort underway to make it easier to provide healthcare by telephone or over the Internet, in what is known as “telemedicine.” New Jersey lawmakers are weighing whether to join the Nurse Licensure Compact, which would allow registered nurses and licensed practical nurses to practice across state lines. The compact has drawn interest from New Jersey nursing groups and legislators from both parties. But it also presents challenges before New Jersey can sign onto it. For one thing, the state law requiring criminal background checks for nurses is more rigorous than such laws in other states. In addition, the New Jersey Board of Nursing’s license database hasn’t been compatible with those of other states. Nurses can be involved in interstate phone consultations during emergencies, such as helping with patients who must be transported by helicopter to a hospital in another state. As the number of such cases has grown, the state-based system for regulating nurses’ licenses has become an issue. New Jersey nearly joined an earlier version of the Nurse Licensure Compact in 2001, but the state’s criminal-background checks and database incompatibility derailed the effort. Sen. Robert W. Singer (R-Monmouth and Ocean) wants to ensure that the same problem doesn’t recur. “The other states that we’re entering this compact with have a lesser requirement for nursing,” Singer said. At the same time, Singer said he sees the advantages of making it easier for out-of-state nurses to work in New Jersey. He recalled that during superstorm Sandy, different licensure rules were a roadblock to having nurse volunteers from Delaware and Pennsylvania help at overburdened clinics set up at shelters near the Jersey Shore. “I think it’s a great idea,” Singer said of the compact. The New Jersey State Nurses Association, the largest nursing group in the state, has mixed feelings about the bill. Association CEO Judith Schmidt said her organization supports the “concept of the multistate compact,” but asked legislators to delay action on a bill that would make New Jersey a party to the compact. “We would like to have some time to see what the other states are experiencing,” Schmidt said, adding that association members are concerned that other states will make changes to the compact that would require New Jersey to also make changes to state law. If such changes are made after New Jersey has passed the bill, it could delay New Jersey’s participation for several years, Schmidt explained. Bill sponsor Sen. Jim Whalen (D-Atlantic) said New Jersey legislators could keep an eye on what is happening in other states before passing a final version of the bill. If other states enact laws that are in synch with New Jersey’s, “fine, we move it on the floor,” Whalen said. “If they don’t, we hold it until the next session -- at least we’re one step in.” The next legislative session begins in January. Regarding Singer’s concern that other states have lower standards for licensing nurses, Whalen noted that the compact is intended to create universal standards that are similar to those in states with rigorous licensure. But Singer expressed skepticism, saying “There’s always an intent,” but adding that it may not play out in practice. Sen. Joseph F. Vitale (D-Middlesex), also a sponsor, noted that the bill must undergo more steps before becoming law, including October2015

having the nonpartisan Office of Legislative Services review its impact on the state budget. Jeanne Otersen, chief of staff for the Health Professionals and Allied Employees labor union, suggested amending the bill to add a provision that it wouldnâ&#x20AC;&#x2122;t go into effect until the other states' licensing standards are compatible with New Jersey's â&#x20AC;&#x201C;and until New Jersey's database is compatible with the others. Under the terms of the compact, it will go into effect and become binding on the participating states when a majority of the states have joined it. Twenty-five other states, including Delaware and Maryland, have passed laws to join the compact, so it will go into effect when the next state signs on. The Senate Health, Human Services, and Senior Citizens Committee unanimously released the bill on Monday. It now goes to the Senate Budget and Appropriations Committee for a hearing. The Assembly version has been referred to the Assembly Health and Senior Services Committee.

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Insurance

Out of network dispute to return: Coughlin says he’s ready to unveil revamped bill By Anjalee Khemlani You haven't forgotten about the out-of-network billing legislation in New Jersey, have you? It was the health care issue that dominated the state with its various doomsday scenarios before the release of Horizon’s OMNIA Health Alliance took over that role a few weeks ago. The health care issue that was a make-or-break for the future of for-profit hospital systems such as CarePoint, before its always quotable CEO Dennis Kelly resigned to move out of state. The health care issue that ruled the state back in the time Donald Trump was polling just a few points ahead of Gov. Chris Christie. It’s hard to believe this was just five months ago. But it’s been top of mind for Assemblyman Craig Coughlin (D-Woodbridge), who has been tweaking the bill he helped introduce May 14. The bill’s latest version, set to be unveiled after the Nov. 3 elections, includes several updates — some, Coughlin said, come courtesy of the OMNIA announcement. “The OMNIA plan has made it more challenging,” Coughlin said. “Some of the stakeholders who are uncertain, particularly hospitals, are slower to come around to the notion of accepting the bill because of the uncertainty of the OMNIA plan’s impact on them.” But behind-the-scenes work continues on the bill as stakeholders discuss the various parts of the bill. For instance, the latest version of the legislation does not have any caps on how much a health care facility can bill a patient or an insurance carrier for out-of-network urgent or emergency care. Instead, lawmakers are looking at arbitration as a method of dealing with the surprise exorbitant medical bills that patients get from out-of-network providers. Those are the types of issues lawmakers and stakeholders hope to tackle by the end of the year. “We are working, or have worked throughout the summer, with stakeholders, so I think it is still a front-burner item and it’s important to keep it there because we do want to try and get something done in this term,” Coughlin told NJBIZ. “The successes are that we have crafted a bill that is going to be able to achieve bipartisan support that protects consumers. “Probably the other way around, it will get bipartisan support because it protects consumers.” But there are still challenges, such as opposition or concerns coming from medical societies and the state’s hospital association. Though the OMNIA issue has been demanding the attention of both the New Jersey Hospital Association and Medical Society of New Jersey, they have been very involved in the progress of the out-of-network bill’s language. The NJHA has had a task force of more than a dozen individuals representing interests of hospitals in all sectors and sections of the state, which has met with the lawmakers at least five times over the summer, said Kerry McKean Kelly, spokeswoman for the NJHA. Though there is consensus regarding transparency and consumer information, the arbitration process is still being discussed. The MSNJ believes the OMNIA issue and the out-of-network issue are intertwined. President Larry Downs said the focus of the out-of-network “surprise bills” has been the doctors, when in reality the focus should be equally shared with the insurance companies. What OMNIA has done is brought to light just how much the relationship matters, and how low-cost insurance plans can force solo or small practices out of network. “I recognize this is a zero-sum game. If we are saving $92 million, someone isn’t making $92 million, so their concern is legitimate,” Coughlin said. But when you balance that based on sound public policy on what’s best for 9 million people, it is clear changes are needed, he said. In addition, some for-profit hospitals are against the bill. “For their model, they are in trouble. One of their elements is profit,” Coughlin said. “That’s their way of surviving. We are not in business of putting hospitals out of business,” but ensuring people have adequate and affordable health care is the goal. But for-profit and out-of-network CarePoint Health System has been a vocal participant in the debates as the bills have been discussed both in the state Senate and Assembly. October 2014

Continuing the dialogue is a benefit for the public debate, said Kelly, who has provided testimony to legislators, specifically on the effects of a cap on reimbursements. Discussions continue. The timeline, now, is to aggressively pursue the bill’s appearance in front of the Assembly Financial Institutions and Insurance Committee and get a vote on it during the lame duck session, which is fast approaching, Coughlin said.

In-House vs. Outsourced Medical Billing: Pros and Cons The question of whether to outsource medical billing operations or keep the process in-house is one that weighs heavily on many doctors and practice managers. The right answer differs from practice to practice based on a multitude of factors: age of the business, size of local labor market, and state of practice finances, among other considerations. Aside from clinical services, billing and revenue cycle management are the most important processes of your practice. Your cash flow depends on them, so the decision of how to handle these services shouldn’t be taken lightly. You should do thorough assessments of your practice’s cost, staffing, and volume metrics to determine what’s right for you. In the preliminary stages of the decision-making process, however, you’ll need to take a generalized look at what most doctors and administrators consider to be the major advantages and disadvantages that the in-house and outsourcing options each present. In-House Medical Billing Pros Retaining Control: Especially when trusted, long-term employees are executing medical coding and RCM duties, doctors and administrators appreciate having hands-on control of financial operations through in-house billing. Return on Investment: Once a practice has invested in training medical billers and purchasing billing technology, moving to an outsourced solution means losing lots of time and money spent. When there’s a valid infrastructure in place, it’s worthwhile to just refine existing processes to generate the best ROI. Close Proximity: Should issues arise, the accessibility of your in-house billing department is a major advantage, since all it takes to observe the billing process and address any problems is a walk across the office floor. Cons Higher Costs: It’s generally accepted that the expenses of paying billers’ salaries, covering employee benefits, and purchasing technology systems add up to more than is commonly paid out to a third-party billing solution. Liabilities: Medical billing departments can be hotbeds for embezzlement, and general employee neglect (think ignored encounter forms, discarded superbills, and unappealed claim denials) can go largely unnoticed if managers don’t keep a stringent eye on billing operations. Support Issues: If your billing department consists of only two or three staffers, your operations – and cash flow – can be majorly stalled when even just one employee gets sick, goes on vacation, takes a leave of absence or quits altogether. Outsourced Medical Billing Pros Less Expensive: Especially if you’re starting up a new business or transitioning because of an employee’s resignation, outsourcing makes the most financial sense. Check out this hypothetical cost analysis on the topic from Physicians News Digest. Transparency: A medical billing company should be able to supply you with comprehensive performance reports automatically or upon request. This capability grants you unparalleled visibility into your billing operations without requiring you to micromanage – or even oversee – any staffers. Enhanced Consistency: Your outsourcer will be contractually obliged to perform certain services, such as appealing denials, for you with a certain level of success. Plus, you never have to worry about staffing, since it’s their job to support your needs yearround. Cons Hands-Off: While many consider it an advantage that outsourcing makes the management of billing someone else’s problem, it’s tough for more hands-on managers to relinquish control of the process to another entity. Variable Cost: Most medical billing companies charge a percentage of collections, so the more you bring in, the more you’ll pay out. This can make it hard to budget your practice’s expected billing expenses, since costs differ widely between slow and busy months. Hidden Fees: Read any outsourcing contract very carefully. Are there startup charges? Fees for things like printing statements or sending reports? What happens if you cancel your membership? Make sure the money you save by outsourcing isn’t offset by a multitude of “fine-print” charges.

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Four N.J. hospitals among nation’s ‘Most Connected,’ U.S. News says By Anjalee Khemlani

U.S. News & World Report ranked four New Jersey hospitals among the most connected in the country for 2015-2016. The list includes Hackensack University Medical Center, Morristown Medical Center, Overlook Medical Center in Summit, and St. Peter's University Hospital in New Brunswick. “HackensackUMC is honored to be listed among the Most Connected Hospitals in America,” said Robert Garrett, CEO and president, Hackensack University Health Network. “In today’s health care industry, technology has never been more important. Patients and their families have never been more engaged. “Our information technology team, led by Vice President and Chief Information Officer Dr. Shafiq Rab, has done a tremendous job of connecting patients with providers to optimize their health care experience.” U.S. News & World Report said these hospitals are shining examples of how medical centers embrace the digital push — and are ahead of a majority of their peers. “Overall, however, progress has been blocked, among other obstacles, by reluctance to share information with competitors, software from different vendors that can't communicate, physicians who have pushed back at hospitals where they had to grapple with unaccustomed computerized routines and the expense, often exceeding $1 billion in large hospital systems, of retooling antiquated computers,” according to the publication. Nationwide, 158 hospitals were on the 2015-2016 list.

Menendez urges Congress to halt Medicare premium hike Sen. Robert Menendez is urging Congress to block an increase in Medicare Part B premiums set to take effect in January. “Seniors living on fixed incomes should not have to decide between buying food or paying rent and seeing a doctor,” Menendez said at the Martin Luther King Jr. Senior Center in Hackensack on Friday. Premiums for Medicare Part B — which covers outpatient doctor visits, lab tests and supplies like wheelchairs and walkers — could rise by more than 50 percent for around 15 million beneficiaries because of a quirk in federal law. Earlier this month, Menendez, a Democrat, co-sponsored a bill, known as the Protecting Medicare Beneficiaries Act, to keep next year's Part B premiums and deductibles at this year's levels for all Medicare beneficiaries. “I am committed to continuing to work to pass legislation to prevent these premium increases and ensure that seniors on Medicare can continue to receive the care they need and deserve,” Menendez said.

The increase is expected to affect around 30 percent of Medicare beneficiaries — those whose premiums are not automatically deducted from their Social Security checks, those who receive Medicare but not Social Security, those whose incomes exceed $85,000 for individuals or $170,000 for couples and new enrollees. It is also expected to affect low-income people eligible for both Medicare and Medicaid, known as dual-eligibles. Their premiums will be paid for by the state. So while about 70 percent of Medicare recipients will continue to pay $105 per month, about 30 percent could see premiums jump to $159.30 — double that for couples. (The dollar amount could be higher for higher-income couples.) Here's why it's happening: Most Part B premiums are deducted from Social Security checks. However, the Social Security program includes what is known as a "hold harmless" provision, which essentially says the program's benefits can never decrease. Most years, benefits routinely increase because of a cost-of-living adjustment, or COLA, and so Medicare Part B premiums can increase along with the benefit hikes. But in 2016, for just the third time in nearly 40 years, there will be no COLA increase. That means the increase in Medicare premiums can't be paid for by the 70 percent of Social Security recipients who will receive no increase in their monthly check. The remaining 30 percent are excluded from the “hold harmless” provision and will be required to pay the increase. “We need to keep the promise of health care, a decent retirement, and a good, long life in which [seniors] will be cared for as part of our moral obligation,” Menendez said Friday. October 2015

N.J. hospitals reach benchmark in Leapfrog’s C-section ratings By Anjalee Khemlani A new Leapfrog Group C-Section Survey rated hospitals that provided information about the frequency of the surgery, as part of a push for natural births. Cesarean births are typically more costly for the hospital and can be risky for the health of both a mother and baby, yet the numbers for early elected births have been steadily climbing for 40 years. “This means that far too many women are undergoing a major abdominal surgery without medical necessity — with all the risks that any surgery entails," said Leah Binder, CEO and president of The Leapfrog Group. “The good news is that, by reporting to Leapfrog, these hospitals are transparent about this problem, which is an important step toward solving it.” Nationally, the rate of early elective deliveries has dropped to hit the target rate of less than 5 percent. So how did hospitals in New Jersey fare? Overall, since 2011, New Jersey is one of more than 20 states that has met or reduced the rate to less than the target 5 percent. Holy Name Medical Center was one of the Top Five hospitals in the state for C-section rate. "At Holy Name, doctors, nurses and maternal-child staff hold themselves to a higher standard to ensure safe short- and long-term outcomes for both mom and baby.” said Michael Maron, CEO and president of Holy Name Medical Center. "Our staff is always sensitive to families' birth plans, which typically have been shown to lower C-section rates, and we're proud our efforts have gained us this national recognition." Other hospitals that meet the standards of The Leapfrog Group include: • Cape Regional Medical Center, Cape May Court House • Clara Maass Medical Center, Belleville,

• Inspira Medical Center Elmer, Elmer

• Inspira Medical Center Woodbury, Woodbury • Palisades Medical Center, North Bergen

• CarePoint Health Christ Hospital, Jersey City

• Monmouth Medical Center, Long Branch

• Trinitas Regional Medical Center, Elizabeth

• University Medical Center of Princeton at Plainsboro, Plainsboro Some hospitals that declined to respond include AtlantiCare Regional Medical Centers in Atlantic County, CentraState Healthcare System in Freehold, East Orange General Hospital in East Orange, Saint Michael’s Medical Center in Newark, St. Joseph’s Regional Medical Center in Paterson, St. Joseph’s Wayne Hospital in Wayne, St. Luke’s Warren Campus in Phillipsburg and St. Mary’s Hospital in Passaic.

Report: N.J. health center scores among highest in nation for higher than average hospital infections By Anjalee Khemlani Riverview Medical Center, part of the Meridian Health system in Red Bank, is one of a dozen facilities around the country to score the highest for having a higher than average infection rate for five types of hospital infections. The Safe Patient Project by Consumer Reports released Monday rated 3,000 hospitals nationwide, of which only 6 percent scored well. The five hospital-caused infections the report covered were central-line associated bloodstream infections, surgical site infections, catheter-associated urinary tract infections, Methicillin-resistant Staphylococcus aureus or MRSA, and Clostridium difficile or C. diff. Consumer Reports used data reported by hospitals to the Center for Disease Control’s National Health and Safety Network, which is made public by the Centers for Medicare and Medicaid Services. Riverview was the only center in New Jersey, but one of 12 in Florida, Georgia, Connecticut, Ohio, Illinois, Indiana, California and New York. All 12 scored the lowest in preventing hospital infections. Each was given the opportunity to respond the score and reveal what they are doing to improve. “"We take the meeting of quality standards very seriously and welcome the additional focus that measuring and reporting brings to the process. While infection rate is just one measure of a hospital's overall safety record, it is certainly an important one. We are intensely mindful that each number in the wrong direction, regardless of how small a number as in our case, represents a person and a life that we are committed to protecting,” Riverview said in a statement to Consumer Reports.

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