Panel hears providers’ plea to bar insurers from unilateral mid‑contract reimbursement cuts

The Assembly Financial Institutions and Insurance Committee on Thursday heard competing views on Assembly bill 32 57, legislation that would prohibit health insurers from making certain unilateral changes to provider contracts during an active contract term.

Proponents said mid-contract insurer changes are harming care and practice stability. "These clauses have existed for a long time, but their use has increased recently," said Dr. Stephanie Schlitt, a pediatrician and officer at AdvoCare Haddon Pediatric Group, describing a payer policy change that halved reimbursement for a service when two services are provided in one visit. "Changes like this put practices in a difficult position...It causes delays in diagnosis, in treatment, and time away from work and school."

Hospital leaders framed the bill as a protection for planning and community access. Jason Friedman, vice president of managed care at the New Jersey Hospital Association, told the committee that negotiated contract rates must "represent a binding and mutual commitment" because stable reimbursement allows hospitals to "plan, to hire, to invest, and ultimately, to be there for patients." He cautioned, however, that the bill should close a gap that allows insurers to shift reimbursement indirectly by changing internal policies and bulletins.

Insurer and plan representatives urged careful drafting to avoid unintended consequences. Alex Arnold, director of government affairs at the New Jersey Association of Health Plans, said the Department of Banking and Insurance has adopted regulations (plain-language requirements, limits on unilateral changes, 90‑day notice for adverse amendments, and provider rights to decline amendments) and recommended evaluating statutory changes in light of market dynamics.

Committee members asked whether contract protections should be symmetric — for example, if major provider‑network changes should also be constrained — and witnesses replied that many contracts already include clauses limiting provider‑group size or geography. AdvoCare representatives said their principal problem is not network change clauses but insurer policy changes and payment reductions applied midterm.

Where the bill goes next is unclear. Several witnesses asked the committee to clarify whether the legislation should treat material insurer policy changes that affect reimbursement the same as formal contract amendments; Friedman and others urged such an amendment to close what they described as a practical gap between the written contract rate and actual reimbursement.

The meeting provided detailed operational examples and a clear request from providers and hospitals for statutory reinforcement of negotiated terms; plan advocates asked the committee to balance that protection with flexibility for clinically appropriate utilization-management tools and to avoid duplicative regulation.

The committee did not vote on A32 57 during this session; the item was designated "for discussion only."