An Assembly panel approved legislation Monday its supporters said would protect patients from getting socked with bills from out-of-network doctors and hospitals -- a $1 billion problem lawmakers have failed to settle for nearly a decade.

The legislation would protect thousands of New Jerseyans covered by state-regulated health plans from "balance-billing," or paying what an insurance company won't.

Sponsored by Assembly Speaker Craig Coughlin, D-Middlesex, who has made passing the bill one of his top priorities this year, the Assembly Financial Institutions and Insurance Committee approved (A2039) by a 6 to 3 vote with one abstention.

The Senate Commerce Committee was scheduled to vote on the bill later in the day -- a sign the logjam between insurance carriers and health care providers was finally giving way. But Senate sponsor Joseph Vitale, D-Middlesex, asked the Senate Commerce Committee to postpone the hearing. Vitale said he and his colleagues "were working through some issues." He declined to elaborate.

Coughlin predicted the bill would pass both houses before the summer recess, beginning July 1.

Doctors and hospitals would be required to disclose whether they accept their patients' insurance before they undergo elective and non-emergency treatment, according to the legislation. State law protects patients from balance-billing in emergency cases.

If insurance carriers and doctors or physicians cannot agree on an acceptable reimbursement, they may take the case to arbitration, according to the bill. A third party would choose between one of two offers, taking into consideration the complexity of the procedure and experience of the specialist, the bill said.

Just as in past hearings, specialists such as neurosurgeons and orthopedists dominated the testimony Monday, alleging the insurance industry has exaggerated the $1 billion figure. They predicted the bill was tantamount to let insurers dictate what they get paid.

They also urged the committee to allow arbiters to consider reimbursement based on data from FAIR Health, the nation's largest collection of health insurance claims. Connecticut and New York uses rely on this database after they enacted their out-of-network laws.

"This law, if passed as written, will make it impossible for private groups to recruit new surgeons to practice in New Jersey," Steven Priolo, a surgeon from Toms River, said in testimony to the committee. "We will not be able to to compete with other states who are offering much higher salaries."

Assembly Minority Leader and committee member Jon Bramnick, R-Union, defended the specialists, saying their days are numbered practicing in New Jersey. A specialist exodus would limit patients' choices.

"Insurance companies are controlling costs and controlling medicine. They will own the doctors who will earn less now than they did a year or to ago. We will start to lose the best and brightest," Bramnick said.

Raj Raab, a surgeon and principal in the North Jersey Spine Group, took aim at Coughlin and Vitale.

"Why has Trenton been unable to resolve this important issue over the past ten years? After all, our neighbors in New York and Connecticut have already done so. In those states, responsible state legislatures have passed comprehensive, patient protection, and transparency laws," Raab said. "Why can't we do this in New Jersey? I think it's time to blame your leadership."

Insurance companies say health care costs are driven up by specialists, who despite working in hospitals that accept most insurance plans, they often decline to join the network because of paltry payments.

Vitale disputed Raab's comments in a statement after the hearing. "My legislation is fair, balanced, and will provide consumers relief while requiring carriers to pay a fair fee and providers to charge a reasonable price for their services," he said. My fight to protect consumers will not end until those principles are established in law."

If signed into law, the legislation can only be imposed on New Jersey-regulated insurance plans, such as the State Health Benefits Plan and Horizon Blue Cross Blue Shield of New Jersey. Federally regulated and self-insured plans would be permitted to voluntarily accept the law's protections.

Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook.