[First Reprint]

ASSEMBLY, No. 1476

STATE OF NEW JERSEY

INTRODUCED FEBRUARY 5, 1996

By Assemblymen FELICE, KAVANAUGH, Assemblywomen Vandervalk and Murphy

An Act creating the Health Information Electronic Data Interchange Policy ¹Advisory¹ Council in the Department of Health and ¹Senior Services, and¹ supplementing Title 26 of the Revised Statutes.

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

    1. The Legislature finds and declares that:

    a. The delivery of health care services and payment for those services is often a fragmented process, sometimes inaccurately described as a "system," that is comprised of health care providers, insurance carriers or other benefit payers, employers who provide the insurance or other benefit plans under which their employees are covered, and patients, who are, ultimately, the consumers.

    b. These various sectors perform separate, but interdependent functions in the health care service delivery process, and while they may perceive themselves and operate as economically independent units, they are nevertheless functionally dependent in providing or consuming health care services for which they then expect prompt payment.

    c. While the technology exists to advance communication in every sector of this process, each sector operates as a computerized information island, fully functional in itself but without the ability or motivation for computer-to-computer communication with other such islands.

    d. As a result, despite the available technology, a plethora of bills can emanate from even relatively simple diagnostic or treatment services and the resulting massive flow of information, on paper, creates much of the increasing administrative burden placed on the system¹[, accounting for anywhere from 17 to 24 percent of health care costs]¹.

    e. It has been estimated that ¹the health care industry in¹ New Jersey currently processes 150 million health care claims annually, 85% of which are on paper, and that ¹[$760 million in] significant¹ administrative cost savings¹[, or approximately $370.00 for each family in New Jersey,]¹ could be realized with the use of standardized enrollment and claim forms, standardized health care communication protocols and the use of electronic data interchange, or EDI, to receive, transmit and store medical and claims information.

    f. Thus, while state-of-the-art technology is the expected norm in the diagnosis and treatment of illness and injury, in terms of recording, routing and paying for those services, the several parties to the process are using the venerable "paper trail" for billing purposes, which allows them to avoid communicating in a more efficient manner.

    g. Given the multiple parties and divergent interests which are involved in and affected by the health care services delivery process, a council representing those various interests and concerns, to ¹[develop] assist in the development of standards for¹ an effective electronic data interchange network for use by the various parties; and to assist and enable them to achieve some commonality of purpose in the exchange of such information, is necessary and appropriate if the citizens of New Jersey are to benefit from the efficiencies and economies such an interchange can effect.

    2. The Health Information Electronic Data Interchange Policy ¹Advisory¹ Council hereinafter referred to as the council, is created in the Executive Branch of State Government. For the purposes of complying with the provisions of Article V, Section IV, paragraph 1 of the New Jersey Constitution, the council is allocated within the Department of Health ¹and Senior Services¹, but notwithstanding this allocation, the council shall be independent of any supervision or control by the department or by any board or officer thereof, and shall request appropriations for its expenses independently therefrom.

    3. The council shall consist of ¹[25] 31¹ members, as follows:

    a. The Commissioner of Health ¹and Senior Services¹ or ¹[his] the commissioner's¹ designee, ex officio, who shall serve as chairman of the council;

    b. The Commissioner of ¹Banking and¹ Insurance or ¹[her] the commissioner's¹ designee, ex officio;

    c. The Commissioner of Human Services or ¹[his] the commissioner's¹ designee, ex officio;

    d. The State Treasurer or ¹[his] the State Treasurer's¹ designee, ex officio;

    e. The Attorney General or ¹[her] the Attorney General's¹ designee, ex officio;

    f. The Director of the Division of Pensions and Benefits, in ¹[his] the director's ¹ capacity as the secretary to the State Health Benefits Commission or ¹[his] the secretary's ¹ designee, ex officio;

    g. The President of the ¹[University of Medicine and Dentistry of New Jersey] New Jersey Hospital Association¹, or ¹[his] the President's ¹ designee, ex officio;

    h. The President of the ¹[New Jersey Institute of Technology] University of Medicine and Dentistry of New Jersey, ¹ or ¹[his] the President's¹ designee, ex officio;

    i. The President of Thomas Edison State College or ¹[his] the President's¹ designee, ex officio;

    j. ¹[Four] Six¹ members to be appointed by the President of the Senate, no more than ¹[two] three¹ of whom shall be of the same political party, as follows:

    (1) One representative of the medical profession, upon the recommendation of the Medical Society of New Jersey;

    (2) One representative of business, upon the recommendation of the New Jersey Business and Industry Association;

    (3) One representative of a health maintenance organization, upon the recommendation of the New Jersey Health Maintenance Organization Association; ¹[and]¹

    (4) One representative of a health insurer domiciled in this State;      ¹(5) One representative of the home health care industry, upon the recommendation of the Home Health Assembly of New Jersey; and

    (6) One representative of physical therapists in the State, upon recommendation of the American Physical Therapy Association of New Jersey;¹

    k. ¹[Four] Six¹ members to be appointed by the Speaker of the General Assembly, no more than ¹[two] three¹ of whom shall be of the same political party, as follows:

    (1) One representative of the pharmacy profession, upon the recommendation of the Pharmacist Institute of New Jersey;

    (2) One representative of organized labor, upon the recommendation of the New Jersey State AFL-CIO;

    (3) One representative of hospitals, upon the recommendation of the New Jersey Hospital Association; ¹[and]¹

    (4) One representative of a health service corporation, or if none exists, a hospital or medical service corporation, domiciled in this State; ¹[and]

    (5) One representative of the dental profession, upon the recommendation of the New Jersey Dental Association; and

    (6) One representative of the occupational therapists in this State, upon the recommendation of the New Jersey Occupational Therapy Association;¹

    l. ¹[Eight] 10¹ members to be appointed by the Governor, ¹[with the advice and consent of the Senate,]¹ no more than ¹[four] five¹ of whom shall be of the same political party, as follows:

    (1) One representative of the chiropractic profession, upon the recommendation of the New Jersey Chiropractic Society;

    (2) One representative of small business, upon the recommendation of the New Jersey State Chamber of Commerce;

    (3) One representative of long-term health care facilities, upon the recommendation of the New Jersey Association of Health Care Facilities;

    (4) One representative of a health insurer authorized to transact business in this State, but not domiciled in this State¹, upon the recommendation of the Health Insurance Association of America¹;

    (5) One representative of the nursing profession, upon the recommendation of the New Jersey State Nurses Association;

    ¹(6) One representative of the osteopathic profession, upon the recommendation of the New Jersey Association of Osteopathic Physicians and Surgeons;

    (7) One representative of the mental health professions, upon the recommendation of the Statewide Mental Health Coalition;¹ and

    ¹[(6)] (8)¹ Three members of the public, none of whom shall represent the sectors of business, labor, health care providers or the professions or insurers listed above, but who shall be consumers of health care services.

    4. a. The council shall organize upon the appointment of a majority of its authorized membership.

    b. Appointed members of the council shall serve for three year terms, except that, of the members first appointed, ¹[one] two¹ each of the members appointed by the President of the Senate and the Speaker of the General Assembly and two of the members appointed by the Governor shall be appointed for terms of one year, and ¹[one] two¹ each of the members appointed by the President of the Senate and the Speaker of the General Assembly and two of the members appointed by the Governor shall be appointed for terms of two years.

    c. Each member shall hold office for the term of appointment and until a successor is appointed and qualified. All vacancies shall be filled in the same manner as the original appointment. Members appointed to fill a vacancy occurring for any reason other than the expiration of the term shall serve for the unexpired term only. An appointed member of the council shall be eligible for reappointment. An appointed member may be removed for cause.

    d. Appointed members shall serve without compensation, but shall be reimbursed for necessary expenses incurred in the performance of their duties.

    e. Action may be taken and motions and resolutions may be adopted by the council by an affirmative vote of not less than ¹[12 members] a majority of the quorum required to conduct business¹.

    5. ¹[a.]¹ The council shall appoint an executive director, who shall serve as secretary to the council. The executive director shall serve at the pleasure of the council and shall be in the unclassified service of the Civil Service. Upon the appointment of a majority of the members of the council, the Commissioner of Health ¹and Senior Services¹ shall appoint an acting executive director from among his staff, who shall serve until the appointment of an executive director by the council and who shall not be eligible for appointment by the council.

    ¹[b. To the extent assistance is not available under subsection c. of this section, the council may appoint other employees as may be necessary, within the limits of funds appropriated to it or otherwise made available to it for its purposes. The executive director shall be responsible for the selection of properly qualified staff members, who shall have backgrounds appropriate to the work of the council. Appointed staff members shall be employed in the unclassified service of the Civil Service, except that employees performing stenographic or clerical duties shall be in the career service and appointed pursuant to Title 11A of the New Jersey Statutes. Permanent career service employees who are appointed to an unclassified position with the council shall have a right of reinstatement to the career service to a level held prior to service with the council, unless the employee has been separated, after opportunity for a hearing, from the service with the council for reasons which constitute cause for removal from the career service.

    c.] The Commissioner of Health and Senior Services shall provide staff support to assist the council in carrying out its responsibilities.¹ The council is entitled to the assistance and services of the employees of any State, county or municipal department, board, bureau, commission or agency, as it may require and as may be available to it for its purposes.

    ¹[d.]¹ The council is authorized to contract with outside providers for services in support of council responsibilities and documented as otherwise unavailable to the council.

    6. a. The council shall develop ¹standards for¹ an effective electronic data interchange (EDI) network for use by the various sectors in the health care services delivery process. In particular, the council's responsibilities shall include, but not be limited to:

    (1) ¹[Promulgating Statewide protocol] Developing¹ standards for interorganizational communication among the participants in the health care services delivery process.

    (2) ¹[Promulgating Statewide protocol] Developing¹ standards for the transmission of forms and information among the various sectors of the health care services delivery process.

    (3) Encouraging health insurers and other benefit providers to issue ¹[magnetic stripe "smart cards," or similar type]¹ patient identification cards or equipment, ¹such as magnetic stripe, "smart cards" or other patient identification technology,¹ that provide rapid, efficient electronic access to health care services, to covered individuals.

    (4) Encouraging and facilitating the development of ¹[privately owned and operated open] secure¹ networks which would be interconnected and available to all participants of the health care services delivery process.

    b. In developing the ¹standards for the¹ EDI network pursuant to subsection a. of this section, the council shall ¹[adopt and utilize] consider¹ the following guidelines:

    (1) National standards, such as those developed by the American National Standards Institute (ANSI) and the Health Care Financing Administration (HCFA) ¹[should] shall¹ be ¹evaluated and¹ adopted wherever possible.

    (2) ¹[All] To the greatest extent possible, all¹ participants shall be provided with equal functionality in their access to the network. Interconnection speeds and types of connections may vary, but the services offered shall be available to all participants.

    (3) ¹[If multiple networks are established, the sum total of all networks shall act as a single network for all participants.

    (4) As a national information super-highway is developed, New Jersey's health care] The State's¹ EDI ¹network¹ shall ¹[provide a] encourage¹ direct ¹[connection] connections¹ to ¹[the highway and attach to the interim super-highway,]¹ the Internet ¹or similar networks for communication and research purposes¹.

    ¹[(5)] (4)¹ The network's design shall be flexible and allow for new services to be offered without impacting existing services.

    ¹[(6)] (5)¹ Wherever possible, the ¹State's EDI¹ network shall utilize existing networks that are available for other applications and shall take into consideration existing proprietary networks which can connect to and transmit specified health care enrollment, claim and medical information to the open networks in the State.

    ¹[(7) All] (6) Whenever possible, all¹ participants in the network shall establish a single connection to the network and this single connection should support all functions of the network.

    ¹[(8)] (7)¹ All providers of network services shall agree to work in an ethical manner so as not to achieve a competitive advantage when collecting or accumulating content information from the transmissions carried on their network.

    ¹c. To the maximum extent possible and practicable, the council shall coordinate its responsibilities and activities with other health information initiatives undertaken by the Department of Health and Senior Services and other State agencies.¹

    7. The council shall ¹[also perform the following functions in furtherance of] support¹ the State's responsibilities to monitor the quantity and quality of health care ¹services in the following manner¹:

    a. The council shall examine carefully the Community Health Management Information System (CHMIS) model and similar information network models of a health care monitoring data base and consider ¹[adopting their] recommending appropriate¹ design features.

    b. The council shall ¹[assure] recommend¹ that the ¹State's¹ EDI network provides appropriate structure for capture of data for monitoring health care quantity and quality by the State.

    c. The council shall ¹[assure] recommend¹ that a data base system is developed to capture data and store it in appropriate form for routine monitoring reports and policy research.

    d. The council¹, in coordination with other State agencies,¹ shall ¹[provide continuous oversight] develop recommendations¹ with respect to the establishment of, and compliance with, health care information confidentiality and security requirements by health care providers and payers ¹, including the maintenance of the confidentiality of proprietary information of health care providers and payers¹.

    e. The council shall ¹[establish] recommend¹ a procedure for routinely producing and distributing monitoring reports on the performance of payers and providers.

    8. In addition to its responsibilities pursuant to sections 6 and 7 of this act, the council shall:

    a. ¹[Consult with] Advise¹ the Commissioner of ¹Banking and¹ Insurance, in the ¹[promulgation of demonstration] development of recommended¹ standards, ¹[and]¹ using national standards wherever possible, for the electronic receipt, transmission and storage of health care claim information by hospital service, medical service and health service corporations, health insurers and health maintenance organizations pursuant to section 7 of P.L. , c. (C. )(now pending before the Legislature as Assembly, No. 1481 and Senate, No. 48 of 1996).

    b. ¹[Consult with] Advise¹ the Commissioner of ¹Banking and¹ Insurance in ¹[his promulgation] the development¹ of standard health care enrollment and claim forms pursuant to section 7 of P.L. , c. (C. )(now pending before the Legislature as Assembly, No. 1473 and Senate, No.49 of 1996).

    c. Consult with the Commissioner of Health ¹and Senior Services¹ in his preparation of the annual report on health care expenditures in New Jersey required by P.L. , c. (C. )(now before the Legislature as Assembly, No. 1479 and Senate, No. 43 of 1996.).

    9. a. The council shall submit an annual report to the Governor and the Legislature which assesses current efforts, and makes such recommendations, including legislative or administrative action for proposed efforts, to reduce health care administrative costs through electronic data interchange and other automated information technology, and which specifies the costs of implementation and discusses any anticipated difficulties with respect to the use of the technology.

    b. In addition, every fifth annual report shall also include an analysis of the council's accomplishment of its stated objectives, a forecast of emerging technologies and the EDI needs of the health care services ¹[delivery process] industry¹ for the ensuing five years, and how the council anticipates responding to those needs and incorporating those technologies in its operations over the next five years, including any recommendations for change in its membership or charge, or other legislative or administrative action.

    c. ¹[The] If funds are available, the¹ reports required by this section shall be prepared with the cooperation and assistance of the New Jersey Institute of Technology and Thomas Edison State College and the council shall use the funds appropriated to it or otherwise made available to it to fund the costs of Thomas Edison State College and the New Jersey Institute of Technology for their services provided to the council in this regard.

    ¹[10. For the fiscal year beginning July 1, 1997 and thereafter, funds for the operation of the council shall be appropriated from the Electronic Data Interchange Technology Development Fund established in P.L. , c. (C. )(now before the Legislature as Assembly, No. 1480 and Senate, No. 45 of 1996.).]¹

    ¹[11.] 10.¹ The council ¹[may adopt, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), such rules and regulations as it deems necessary to carry out its responsibilities under this act] shall make recommendations to the Commissioner of Health and Senior Services through resolutions adopted by a recorded majority vote of the council regarding the development of standards for the State's EDI network. If the commissioner disagrees with the recommendations of the council, the commissioner shall present the reasons therefor to the council¹.

    ¹[12. For the fiscal year beginning July 1, 1996, there is appropriated $250,000 from the General Fund to the Health

Information Electronic Data Interchange Policy Council to effectuate the purposes of this act.]¹

    ¹[13.] 11.¹ This act shall take effect immediately.

Establishes Health Information Electronic Data Interchange Policy Advisory Council.