S2507

An Act concerning certain health care provider networks, and supplementing chapter 30 of Title 17B of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

“Contracting entity” means any person or entity that enters into direct contracts with providers for the delivery of health care services in the ordinary course of business, including a third party administrator as defined by section 1 of P.L.2001, c.267 (C.17B:27B-1).

“Covered person” means an individual who is covered under a health insurance plan.

“Dental benefits 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, dental plan organization, or a carrier either on a stand-alone basis or as part of other coverage including, but not limited to, health benefits.

“Health care services” means services for the diagnosis, prevention, treatment, or cure of a health condition, illness, injury, or disease.

“Health insurance plan” means any hospital and medical expense incurred policy, health maintenance organization subscriber contract, or any other health care plan or arrangement that pays for or furnishes medical, dental, or health care services, whether by insurance or otherwise. Health insurance plan shall include a dental benefits plan. “Health insurance plan” shall not include one or more, or any combination of, the following: coverage only for accident, or disability income insurance; coverage issued as a supplement to liability insurance; liability insurance, including general liability insurance and private passenger automobile insurance; workers’ compensation or similar insurance; automobile medical payment insurance; credit-only insurance; coverage for on-site medical clinics; coverage similar to the foregoing as specified in federal regulations issued pursuant to the federal “Health Insurance Portability and Accountability Act of 1996,” P.L.104-191, under which benefits for medical care are secondary or incidental to other insurance benefits; benefits for long-term care, nursing home care, home health care, or community-based care; specified disease or illness coverage, hospital indemnity or other fixed indemnity insurance, or such other similar, limited benefits as are specified in regulations; Medicare supplemental health insurance as defined under section 1882(g)(1) of the federal Social Security Act (42 U.S.C. s.1395ss(g)(1)); coverage supplemental to the coverage provided under chapter 55 of title 10, United States Code (10 U.S.C. s.1071 et seq.); or other similar limited benefit supplemental coverages.

"Provider" means an individual or entity which, acting within the scope of its licensure or certification, provides a covered service defined by the health or dental benefits 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. “Provider” shall not include a physician organization or physician hospital organization that leases or rents the physician organization’s or physician hospital organization’s network to a third party.

“Provider network contract” means a contract between a contracting entity and a provider specifying the rights and responsibilities of the contracting entity and providing for the delivery of and payment for health care services to covered persons.

“Third party” means a person or entity that enters into a contract with a contracting entity or with another third party to gain access to a provider network contract.

2. A contracting entity shall not grant to a third party access to:

a. a provider network contract; or

b. a provider’s health care services and contractual discounts pursuant to a provider network contract.

3. This act shall not apply to:

a. a provider network contract for services provided to beneficiaries of the Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), the Medicare program established pursuant to the federal Social Security Act, (42 U.S.C. s.1395 et seq.), or the NJ FamilyCare Program established pursuant to P.L.2005, c.156 (C.30:4J-8 et al.); and

b. situations in which access to a provider network contract is granted to an entity operating under the same brand licensee program as the contracting entity.

4. a. Any person who violates any provision of this act shall be liable to a civil penalty in an amount of not less than $500, or more than $10,000, for each violation. A penalty shall be collected and enforced by a summary proceeding brought by the Commissioner of Banking and Insurance pursuant to the provisions of the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.).

b. In addition to any penalty pursuant to subsection a. of this section, it shall be an unfair trade practice pursuant to the provisions of N.J.S.17B:30-1 et seq. and a violation of that act for any person to knowingly access or utilize a provider’s contractual discount pursuant to a provider network contract in violation of this act.

5. The Commissioner of Banking and Insurance shall, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations necessary to effectuate the purpose of this act.

6. This act shall take effect on the 90th day next following enactment and shall apply to all provider network contracts that are delivered, issued, executed or renewed in this State, on or after the effective date.

STATEMENT

This bill prohibits granting access to physician discounts under a provider network contract, in order to prevent the improper selling or leasing of these contractual discounts, under what is commonly known as a “silent PPO (preferred provider organization)” arrangement.

Specifically, the bill prohibits a contracting entity, which is defined as any person or entity that enters into direct contracts with providers for the delivery of health care services in the ordinary course of business, from granting to a third party access to:

(1) a provider network contract; or

(2) a provider’s health care services and contractual discounts pursuant to a provider network contract.

The bill excludes from its provisions:

(1) provider network contracts for services provided to beneficiaries of the Medicaid program, the Medicare program, or the NJ FamilyCare Program; and

(2) situations in which access to a provider network contract is granted to an entity operating under the same brand licensee program as the contracting entity.

The bill includes a penalty provision, which provides that any person who violates any of the bill’s provisions shall be liable to a civil penalty in an amount of not less than $500, or more than $10,000, for each violation, which may be collected by a summary proceeding. In addition, it shall be an unfair trade practice pursuant to the provisions of N.J.S.17B:30-1 et seq., and a violation of that act for any person to knowingly access or utilize a provider’s contractual discount pursuant to a provider network contract in violation of the bill’s provisions.