New Jersey Holds Off on Waiving Cost Sharing for COVID-19 Treatment as Cases Mount

Posted on April 3, 2020 by Sam Sutton

Thousands of New Jersey residents will soon be on the hook for massive medical bills as Covid-19 confines patients to hospital beds and ventilators for days or weeks at a time.

But while Gov. Phil Murphy was quick to direct state-regulated insurance plans to waive co-payments and other forms of cost-sharing for coronavirus testing, he’s held off on any action requiring state-regulated health plans from absorbing some, or all, of the coronavirus treatment costs borne by consumers. 

“We’re going to come back to that,” Murphy told POLITICO earlier this week. 

The question of how to handle the consumer costs of coronavirus treatments has perplexed Murphy administration officials for weeks.

On one hand, state officials have encouraged those exhibiting symptoms to consult with their doctors and, if necessary, visit one of the state’s increasingly overburdened hospitals. On the other, high deductible plans with hefty co-payments all but assure patients would face massive medical bills if their case required hospitalization, potentially discouraging some from seeking care.

The state needs Covid-19 patients to receive treatment, but waiving cost-sharing for them doesn’t mean those health care expenses go away. It just means someone else will have to pay for them.

“For prospective treatment, we’re looking at all options. But we have to be honest that treatment is very expensive and we need the federal government to step up in a big way,” Murphy’s Chief Counsel Matt Platkin said on a media call last month. “We desperately need the federal government to make those sorts of options available. Treatment is very expensive and, obviously, we’re going to do everything we can. But the state needs help.”

Only a handful of states, including Massachusetts, New Mexico and North Carolina, have required health plans to waive cost-sharing for Covid-19 treatment.

Some health plans have moved ahead independently. On Thursday, Horizon Blue Cross Blue Shield of New Jersey announced it was waiving consumer obligations on any covered benefits associated with treatment for Covid-19. Blue Cross Blue Shield carriers in other states have done the same, as has Cigna. 

Horizon, a nonprofit health insurance company that covers around 3.4 million people across the state, had previously waived similar obligations related to coronavirus testing and emergency room visits, as well as telemedicine appointments — which have surged in the weeks since Covid-19 first hit in New Jersey. 

The new cost-sharing waiver also applies to public health plans administered by Horizon, including New Jersey’s Medicaid managed care program and the state’s health benefit plans.

Those covered by other carriers through the individual, small- and large-employer marketplaces will not receive the same benefit. Over the last two weeks, some lawmakers have started pushing for that to change.

“Treatment can’t wait. We can’t put patients in the position where they’re reluctant to receive care because of the cost,” said state Sen. Joseph Vitale (D-Middlesex), who chairs his chamber‘s health committee, in an interview. “The cost of the treatment has to be covered. It’s going to be expensive but we can’t frighten people off from care if they think they’re going to have to pay the bill.”

Last month, when Assembly Speaker Craig Coughlin and Minority Leader Jon Bramnick introduced legislation to address the many challenges posed by coronavirus, an initial draft of one bill included language that would have required state-regulated health insurance carriers to waive cost-sharing treatment, as well as testing. The Murphy administration had already taken similar steps.

Ultimately, the treatment provisions were scrapped from the bill, NJ A3843 (20R), prior to it seeing a vote on the floor — much to Bramnick’s chagrin. Murphy signed the legislation on March 21.

“Government, insurance companies, this is when they’re needed. And we need to make sure that benefits are available to the broadest number of people of this country and this state,” Bramnick said in an interview. “The insurance industry, they’re going to have to step up as well.” 

Coughlin spokesperson Kevin McArdle told POLITICO such a bill could be considered if another round of coronavirus legislation moves through the Legislature.

Projecting the potential costs of such a move will be complicated. 

New Jersey has recorded 25,590 positive cases of Covid-19 since the first case was detected early last month. With testing materials in short supply, the Murphy administration has limited tests to those with symptoms, which means the total number of cases is almost certainly much higher. 

Most patients — around 80 percent — will be able to recover at home. But state officials estimate around 15 percent of those who contract the virus will have to be hospitalized at some point. Medical centers in the northern part of the state are already diverting patients to other facilities because they’re at capacity.

Severe cases of Covid-19 can require hospital stays of almost two weeks and national projections about the potential cost of care range from $30 billion to $251 billion for just this year.

No matter the outcome, some combination of state and federal assistance will be necessary to cover the bill.

“It might not be such a big number for the state or federal government to cover. Whereas for a small business or a family, it could be devastating,” said Linda Schwimmer, president and CEO of the New Jersey Health Care Quality Institute.

New Jersey hospitals don’t appear to be well situated to immediately absorb those costs.

Elective surgeries — highly lucrative procedures that are the bread and butter of many New Jersey hospitals — were suspended by Murphy last month to redirect medical supplies and workforce into the state’s coronavirus response. While some hospitals had already temporarily suspended those procedures in preparation for the wave of Covid-19 cases, hospital executives said the financial repercussions of that decision could be devastating in the long term.

The implication for insurance providers is also significant. While carriers will no doubt see a deluge of coronavirus-related claims and expenses, they’re also going to be receiving considerably fewer claims for elective procedures.

“The total impact is speculative because it’s going to be counterbalanced by the lack of elective surgeries,” Schwimmer said.

That isn’t the same thing as saying the absence of those expenses would fully offset any Covid-19-related hits taken by insurance providers. In March, Covered California — that state’s health insurance marketplace — projected that premiums could spike by as much as 40 percent next year in the absence of federal action. 

And not unlike hospitals, health insurance plans may also face cash flow issues. Unemployment is spiking, which likely means more workers are struggling to meet their premiums.

Horizon waived the “actively at work” requirement for its group health plans, which allows plan sponsors to maintain coverage for employees who’ve been furloughed, laid-off or whose full-time status has been reduced.

In those instances, the share of premiums coming from employees covered by the affected plans could decrease or vanish, depending on the plan.

“I think what we see is the whole economy is seriously injured and one of the things that has to be included in the economy is the incurrence of health care costs,” RWJBarnabas Health President and CEO Barry Ostrowsky said in an interview. “Particularly at a time now where there’s a disproportionate number of folks with thinner insurance who also may have lost their source of income.”

“It’s going to be an issue,“ he said. “There isn’t any doubt about it.“ 

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New Jersey Holds Off on Waiving Cost Sharing for COVID-19 Treatment as Cases Mount