ASSEMBLY, No. 1874
STATE OF NEW JERSEY
INTRODUCED MAY 2, 1996
By Assemblyman GARRETT
An Act concerning the regulation of certain health care delivery organizations.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The Legislature finds and declares that:
a. There exist in this State many differing health care organizations that provide New Jersey residents with health care benefits and services using various degrees of managed care.
b. The degree to which these health care organizations are regulated by the State varies considerably, and in many cases, exists only to a limited degree.
c. It is therefore in the public interest to ensure that these health care organizations are financially able to deliver the health care services they promise to provide and that they adhere to appropriate standards for accessibility and quality of care.
2. As used in this act:
"Carrier" means an insurance company, health service corporation, hospital service corporation, medical service corporation, health maintenance organization, dental service corporation or dental plan organization authorized to issue health benefits plans in this State.
"Commissioner" means the Commissioner of Insurance.
"Covered person" means a person on whose behalf a carrier or other entity offering a health benefits plan is obligated to pay benefits or provide health care services, medical equipment or medical supplies pursuant to the terms of the health benefits plan and includes persons obtaining their benefits though non-insured or self-funded arrangements.
"Covered service" means a health care service provided to a covered person under a health benefits plan for which the carrier, health care delivery organization or employer offering the plan is obligated to pay benefits or provide health care services, medical equipment or medical supplies and includes health care services, medical equipment or medical supplies provided through non-insured or self-funded arrangements.
"Department" means the Department of Insurance.
"Health benefits plan" means a benefits plan which pays hospital and medical expenses for covered health care services, medical equipment or medical supplies, and is delivered or issued for delivery, on an insured or non-insured basis in this State, by or through a carrier, health care delivery organization or an employer. For purposes of this act, "health benefits plan" does not include: coverage arising out of worker's 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 delivery organization" means an entity which contracts with health care providers organized under common management for the purpose of creating a network of health care professionals to provide limited health care services, medical equipment or medical supplies, or to provide comprehensive health care services, medical equipment or medical supplies. A health care delivery organization may either contract directly with an employer or a carrier for the purpose of providing covered services to covered persons and may provide such benefits either through an insured or non-insured arrangement.
"Health care professional" means a health care professional licensed pursuant to Title 45 of the Revised Statutes.
"Health care provider" means a health care facility as defined in section 2 of P.L.1971, c.136 (C.26:2H-2), a health care professional or other provider of health care services recognized under State law.
"Risk assuming health care delivery organization" means a health care delivery organization which, in the context of providing either limited or comprehensive health care services, medical equipment or medical supplies, assumes a financial risk where its financial gains or losses are based on aggregate measures of medical expenditures or utilization, and reimbursement is not based on the frequency of or severity of covered services, medical equipment or medical supplies provided to covered persons. A risk assuming health care delivery organization may be structured so that it accepts a transference of partial risk from a carrier in the context of providing either limited or comprehensive health care services, medical equipment or medical supplies; or may be structured so that it independently assumes the entire risk associated with providing either limited or comprehensive health care services, medical equipment or medical supplies.
"Risk assumption" means the acceptance of a financial risk associated with the provision of or arrangement for, health care services, medical equipment or medical supplies.
3. a. The commissioner, in consultation with the Commissioner of Health, shall establish, through regulation, a standardized health care delivery organization registration form. Within 180 days after the promulgation of that regulation, every health care delivery organization operating in the State prior to the effective date of this act shall register with the commissioner.
b. Every health care delivery organization operating in this State prior to the effective date of this act shall, within 180 days of the date of filing pursuant to subsection a. of this section, file for certification of their health care provider networks pursuant to the provisions of section 4 of this act.
c. In addition to satisfying the requirements of the provisions of subsections a. and b. of this section, a risk assuming health care delivery organization operating in this State prior to the effective date of this act shall, within 180 days after the date of filing pursuant to subsection a. of this section, apply to the commissioner for licensure pursuant to the provisions of section 5 of this act.
d. Every health care delivery organization established on or after the effective date of this act shall file with the commissioner for certification of their health care provider networks pursuant to the provisions of section 4 of this act, and risk assuming health care delivery organizations shall additionally apply for licensure pursuant to the provisions of section 5 of this act.
4. The commissioner, in consultation with the Commissioner of Health, shall establish, through regulation, appropriate standards governing the certification of all health care delivery organization networks of health care providers. In establishing those standards, the commissioner shall consider the scope and type of health care benefits provided and the geographic service area covered by the network of providers.
a. The commissioner shall establish appropriate financial requirements for health care delivery organizations filing for certification of their network or networks of health care providers, which may include a requirement to post a minimum reserve deposit with the department.
b. The commissioner shall establish appropriate standards governing a health care delivery organization's procedures with respect to:
(1) the quality of the health care providers with whom they contract;
(2) credentialing requirements;
(3) the removal of health care providers from any approved network; and
(4) ongoing quality assurance plans addressing patient satisfaction, which shall be generally consistent with the quality assurance standards governing health maintenance organizations licensed to transact business in this State pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.) and regulations promulgated pursuant thereto.
c. The commissioner shall establish appropriate standards to ensure that covered individuals shall have adequate access to a health care delivery organization's network of health care providers. Standards for accessibility of providers shall be based on geographic service areas, access to medical specialists where appropriate, and shall include patient appeal procedures. Standards established pursuant to this subsection shall be generally consistent with the access and appeal procedures and requirements applicable to health maintenance organizations licensed to transact business in this State pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.) and regulations promulgated pursuant thereto.
5. The commissioner, in consultation with the Commissioner of Health, shall establish through regulation the financial standards required for licensure, which shall include, but not be limited to: minimum capital and surplus requirements; the posting of a reserve with the department; a plan for excess or reinsurance; and an insolvency plan, if appropriate. In establishing those standards, the commissioner shall consider the level and type of risk assumed by the risk assuming health care delivery organization and the scope of health care benefits being provided. The financial standards shall apply to the following categories of risk assuming health care delivery organizations:
a. a health care delivery organization structured to accept a transference of partial risk associated with providing limited benefits for health care services, medical equipment or medical supplies;
b. a health care delivery organization structured to accept the entire risk associated with providing limited benefits for health care services, medical equipment or medical supplies; and
c. a health care delivery organization structured to accept the entire risk associated with providing comprehensive benefits for health care services, medical equipment or medical supplies.
6. The commissioner, in consultation with the Commissioner of Health, shall establish through regulation disclosure requirements for health care delivery organizations, which shall include, but not be limited to:
a. the covered services and benefits to which the covered person is entitled;
b. treatment policies, restrictions or limitations on covered services and benefits;
c. compensation arrangements and practices between health care delivery organizations and health care providers;
d. financial responsibilities of a covered person, including applicable co-payments and deductibles and any differential in those responsibilities which may be applicable in the context of a selection by the covered person to obtain a covered service outside any network of providers which may be established;
e. prior authorization and any other review requirements with respect to accessing covered services;
f. the manner in which covered services may be obtained, including a description of both in-network and out-of-network benefits, if applicable;
g. changes in covered benefits, including any reduction or elimination of previously covered benefits; and
h. the covered person's right to appeal and the procedure for initiating an appeal of any utilization management decision made by or on behalf of the health care delivery organization, with respect to the denial, reduction or termination of a covered health care benefit or the denial of payment for a health care service, medical equipment or medical supplies.
7. This act shall take effect immediately.
STATEMENT
This bill creates a flexible regulatory system for the oversight of certain managed care health care delivery organizations, based on the degree of risk assumed by the health care delivery organization and on the extent to which health care benefits are provided.
The bill requires that all such health care delivery organizations in operation as of its effective date register with the Commissioner of Insurance.
Those health care delivery organizations in existence as of the effective date, as well as newly established organizations, would be required to undergo varying degrees of approval processes, based upon the degree of risk assumed and whether the organization provides limited or comprehensive health care benefits.
Additionally, under the provisions of the bill, all health care delivery organizations would be required to disclose to covered persons obtaining health care services certain information including: a description of covered benefits and services; treatment policies and restrictions or limitations on covered services and benefits; compensation arrangements and practices between health care delivery organizations and health care providers; financial responsibilities of the covered person, including applicable co-payments and deductibles, prior authorization or review requirements with respect to accessing covered services; charges associated with the plan; where and in what manner covered services may be obtained; changes in covered benefits; and appeals procedures for appealing benefit related decisions.
This bill provides a similar degree of regulatory oversight for health care delivery organizations, other than health maintenance organizations, to that currently being considered for health maintenance organizations.
Concerns regulation of certain health care delivery systems.