An Act concerning payment of health and dental insurance claims and supplementing Title 17B
of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
C.17B:30-26 Definitions relative to payment of health and dental insurance plans.
1. As used in this act:
"Capitation payment" means a periodic payment to a health care provider for his services under the terms of a contract between the provider and a payer, under which the provider agrees to perform the health care services set forth in the contract for a specified period of time for a specified fee, but shall not include any payments made to the provider on a fee-for-service basis.
"Carrier" means an insurance company, health service corporation, hospital service corporation, medical service corporation or health maintenance organization authorized to issue health benefits plans in this State and a dental service corporation or dental plan organization authorized to issue dental plans in this State.
"Commissioner" means the Commissioner of Banking and Insurance.
"Contract holder" means an employer or organization that purchases a contract for services.
"Covered person" means a person on whose behalf a carrier offering the plan is obligated to pay benefits or provide services pursuant to the health benefits or dental plan.
"Covered service" means a health care service provided to a covered person under a health benefits or dental plan for which the carrier is obligated to pay benefits or provide services.
"Dental plan" means a benefits plan which pays or provides dental expense benefits for covered services and is delivered or issued for delivery in this State by or through a dental service corporation or dental plan organization authorized to issue dental plans in this State.
"Eligible claim" or "claim for eligible services" means a claim for a covered service under a health benefits or dental plan, subject to any conditions imposed by the health benefits or dental plan.
"Eligible health care provider" means a health care provider whose services are reimbursable under a health benefits or dental plan.
"Health benefits plan" means a benefits plan which pays or provides hospital and medical expense benefits for covered services, and is delivered or issued for delivery in this State by or through a carrier. Health benefits plan includes, but is not limited to, Medicare supplement coverage and risk contracts to the extent not otherwise prohibited by federal law. For the purposes of this act, health benefits plan shall not include the following plans, policies or contracts: accident only, credit, disability, long-term care, CHAMPUS supplement coverage, coverage arising out of a workers' compensation or similar law, automobile medical payment insurance, personal injury protection insurance issued pursuant to P.L.1972, c.70 (C.39:6A-1 et seq.) or hospital confinement indemnity coverage.
"Health care provider" means an individual or entity which, acting within the scope of its licensure or certification, provides a covered service defined by the health benefits or dental plan. Health care provider includes, but is not limited to, a physician, dentist and other health care professionals licensed pursuant to Title 45 of the Revised Statutes, and a hospital and other health care facilities licensed pursuant to Title 26 of the Revised Statutes.
"Insured claim" or "claim" means a claim by a covered person for payment of benefits under an insured health benefits or dental plan.
"Insured health benefits or dental plan" means a health benefits or dental plan providing benefits for covered services to covered persons for which the contract holder pays a premium, which may include a deductible amount payable to a health care provider, and for which the financial obligation for the payment of claims under the plan rests upon the payer.
"Payer" means a carrier or any agent thereof who is doing business in the State and is under
a contractual obligation to pay insured claims.
2. The provisions of this act shall apply only to insured health benefits or dental plans and
insured claims submitted to payers.
C.17B:30-28 Provision of information.
3. A payer shall, at the request of a covered person, that person's agent, or an eligible
health care provider, provide information as to the material required to be submitted to the payer
with a claim for reimbursement, including any documentation which is to be submitted with the
claim and information as to the proper coding, including the standard diagnosis and procedure
codes used by the payer.
C.17B:30-29 Provision of toll-free telephone number.
4. A payer shall provide covered persons and eligible health care providers with a toll-free telephone number for making inquiries regarding paid claims or pending claims. If the commissioner determines that the toll-free telephone numbers provided by the payer are not adequate, he may require separate toll-free numbers for covered persons and health care providers.
A payer shall respond to any covered person's or health care provider's claim inquiry no later
than three business days after receipt of the inquiry.
C.17B:30-30 Maintenance of claims records; audit required.
5. a. A payer shall maintain a record which shall be audited by a private auditing firm at the expense of the payer, to be submitted to the commissioner, Governor and the Legislature annually, in a form established by the commissioner by regulation, of the number of claims, by category:
(1) that are denied because they are for an ineligible service or the health care service was not rendered by an eligible health care provider under the health benefits or dental plan;
(2) that are rejected at their initial submission because of a lack of substantiating documentation;
(3) that are rejected at their initial submission because of incorrect coding or incorrect enrollment information;
(4) that are rejected at their initial submission because of the amount claimed;
(5) that are not paid in accordance with the time limit established by law because the payer deems the claim to require special treatment that prevents timely payments from being made;
(6) that are not paid in accordance with the time limits for payment established by law even though the claims meet the criteria established by law;
(7) upon which the 10%interest penalty established by law has been paid, and the aggregate amount of interest paid for the period covered by the report;
(8) that are denied or referred to the payer's fraud investigation unit, if applicable, or to the Office of the Insurance Fraud Prosecutor in the Department of Law and Public Safety established pursuant to section 32 of P.L.1998, c.21 (C.17:33A-16) because the payer has reason to believe that the claim has been submitted fraudulently; and
(9) any other information the commissioner requires.
b. After reviewing an audit, the commissioner may, if he deems it necessary: require the implementation of a plan of remedial action by the payer; require that the payer's claims processing procedures be monitored by a private auditing firm for a time period he deems appropriate; or both.
If, following an audit, the implementation of a plan of remediation or the monitoring of the payer's claims processing procedures, the commissioner determines that:
(1) an unreasonably large or disproportionate number of eligible claims continue to be rejected, denied, or not paid in a timely fashion for the reasons set forth in paragraph (4), (5) or (6) of subsection a. of this section; or
(2) a payer has failed to pay interest as required pursuant to law, the commissioner shall impose a civil penalty of not more than $10,000 upon the payer, to be collected pursuant to "the penalty enforcement law," N.J.S.2A:58-1 et seq.
c. Every financial examination of a payer performed pursuant to section 11 of P.L.1938,
c.366 (C.17:48-11), section 15 of P.L.1940, c.74 (C.17:48A-15), section 26 of P.L.1968, c.305
(C.17:48C-26), section 13 of P.L.1979, c.478 (C.17:48D-13), section 36 of P.L.1985, c.236
(C.17:48E-36), N.J.S.17B:21-1 et seq. or section 9 of P.L.1973, c.337 (C.26:2J-9), as
applicable, shall include an examination of the payer's compliance with the provisions of this
C.17B:30-31 Additional record of claims.
6. a. In addition to the annual audit required by section 5 of this act, the payer shall maintain and report to the commissioner on no less than a quarterly basis, a record of claims as provided in paragraphs (1) through (9) of subsection a. of section 5 of this act.
b. After reviewing a report, the commissioner may require an immediate audit of the payer
by a private audit firm and after reviewing the audit, if he deems it necessary, may proceed with
a remediation or monitoring procedure as provided by subsection b. of section 5 of this act.
C.17B:30-32 Overdue capitation payment.
7. a. Payment of a capitation payment to a health care provider shall be deemed to be overdue if not remitted to the provider on the fifth business day following the due date of the payment in the contract, if: the health care provider is not in violation of the terms of the contract; and the health care provider has supplied such information to the insurer as may be required under the contract before payment is to be made.
b. An overdue payment shall bear simple interest at the rate of 10% per annum.
8. No later than 180 days following the date of enactment of this act, the commissioner
shall adopt regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.) necessary to carry out the purposes of this act.
C.17B:30-34 Inapplicability of act.
9. The provisions of this act shall not apply to any payer determined by the commissioner
to be impaired, to be subject to the provisions of the "Life and Health Insurers Rehabilitation
and Liquidation Act," P.L.1992, c.65 (C.17B:32-31 et seq.), or to any claims payable by the
"New Jersey Life and Health Insurance Guaranty Association Act" pursuant to P.L.1991, c. 208
(C.17B:32A-1 et seq.).
10. This act shall take effect on the 180thday after enactment.
Approved July 1, 1999.