ASSEMBLY, No. 2499
STATE OF NEW JERSEY
INTRODUCED NOVEMBER 14, 1996
By Assemblywoman TURNER
An Act concerning health maintenance organizations and amending and supplementing P.L.1973, c.337.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 15 of P.L.1973, c.337 (C.26:2J-15) is amended to read as follows:
15. a. No health maintenance organization, or representative thereof, may cause or knowingly permit the use of advertising which is untrue or misleading, solicitation which is untrue or misleading, or any form of evidence of coverage which is deceptive. For purpose of this act:
(1) a statement or item of information shall be deemed to be untrue if it does not conform to fact in any respect which is or may be significant to an enrollee of, or person considering enrollment in, a health care plan;
(2) a statement or item of information shall be deemed to be misleading, whether or not it may be literally untrue, if, in the total context in which such statement is made or such item of information is communicated, such statement or item of information may be reasonably understood by a reasonable person, not possessing special knowledge regarding health care coverage, as indicating any benefit or advantage or the absence of any exclusion, limitation, or disadvantage of possible significance to an enrollee of, or person considering enrollment in, a health care plan, if such benefit or advantage or absence of limitation, exclusion or disadvantage does not in fact exist;
(3) an evidence of coverage shall be deemed to be deceptive if the evidence of coverage taken as a whole, and with consideration given to typography and format, as well as language, shall be such as to cause a reasonable person, not possessing special knowledge regarding health care plans and evidences of coverage therefore, to expect benefits, services, charges, or other advantages which the evidence of coverage does not provide or which the health care plan issuing such evidence of coverage does not regularly make available for enrollees covered under such evidence of coverage.
b. The unfair trade practice provisions of the New Jersey insurance law (N.J.S.17B:30-1 through 22) shall be construed to apply to health maintenance organizations, health care plans and evidences of coverage except to the extent that the commissioner determines that the nature of health maintenance organizations, health care plans and evidence of coverage render such sections clearly inappropriate.
c. An enrollee may not be canceled or nonrenewed except for the failure to pay the charge for such coverage, or for such other reasons as may be promulgated by the commissioner.
d. No health maintenance organization, unless licensed as an insurer, may use in its name, evidence of coverage, or literature any of the words "insurance," "assurance," "casualty," "surety," "mutual," or any other words descriptive of the insurance, casualty, or surety business or deceptively similar to the name or description of any insurance, or surety corporation doing business in this State.
e. A health maintenance organization shall not consider a person's eligibility for medical assistance pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), or the equivalent statute in another state, when determining the person's eligibility for enrollment in, or the provision of health care services under, a contract or certificate for health care services.
f. A health maintenance organization shall not provide financial incentives to a provider to withhold the provision of covered health care services to an enrollee that are deemed medically necessary by that provider.
g. A health maintenance organization shall not deny payment for health care services provided to an enrollee that are deemed medically necessary by the provider of those services, regardless of whether the enrollee has secured prior approval for those services from the health maintenance organization or the enrollee's primary care physician.
h. A health maintenance organization shall not discourage or prevent a provider, through a contractual arrangement or otherwise, from discussing a diagnostic testing or treatment option with an enrollee, regardless of whether the test or treatment option is covered under an enrollee agreement or is deemed experimental by the health maintenance organization.
i. A health maintenance organization shall not expend on health care benefits to its enrollees in any calendar year an amount which is less than 90% of its gross receipts for the previous calendar year as certified by the commissioner, except that this requirement shall not apply to a health maintenance organization which has been operating for less than one full calendar year.
As used in this subsection, "gross receipts" means all consideration given or contracted to be given, on a prepaid or copayment basis, to a health maintenance organization, excluding consideration for services provided outside of this State to an individual who is not a resident of this State.
The provisions of this section shall be enforced by the State Director of the Division of Consumer Affairs and, where applicable, the commissioner or the Commissioner of Insurance. Nothing in this act shall limit the powers of the Attorney General and the procedures with respect to consumer fraud in P.L.1960, c.39 (C.56:8-1 et seq.).
(cf: P.L.1995, c.291, s.9)
2. (New section) A provider as defined in section 2 of P.L.1973, c.337 (C.26:2J-2) who, through a contractual arrangement or otherwise, provides health care services to a person enrolled with a health maintenance organization shall be immune from civil or criminal liability solely as a result of any limitation imposed by the enrollee's health maintenance organization with respect to the provision of health care services to the enrollee.
3. This act shall take effect immediately.
STATEMENT
This bill prohibits a health maintenance organization (HMO) from implementing a number of restrictions with respect to enrollee treatment options which are currently imposed by HMO's. Under the bill, an HMO would be prohibited from:
-- providing financial incentives to a provider to withhold the provision of covered health care services to an enrollee that are deemed medically necessary by that provider;
-- denying payment for health care services provided to an enrollee that are deemed medically necessary by the provider of those services, regardless of whether the enrollee has secured prior approval for those services from the health maintenance organization or the enrollee's primary care physician; and
-- discouraging or preventing a provider, through a contractual arrangement or otherwise, from discussing a diagnostic testing or treatment option with an enrollee, regardless of whether the testing or treatment option is covered under an enrollee agreement or is deemed experimental by the HMO.
In addition, the bill requires that an HMO annually spend at least 90% of its gross receipts (as certified by the Commissioner of Health) on health care benefits to its enrollees, except that an HMO which has been operating for less than one full calendar year is exempted from this requirement. Under this provision, the aggregate amount which an HMO could apply to administration and other expenses and retain as profit could not exceed 10% of its gross receipts.
Finally, the bill protects a health care provider who, through a contractual arrangement or otherwise, provides health care services to an HMO enrollee from civil or criminal liability solely as a result of any limitation imposed by the enrollee's HMO with respect to the provision of health care services to the enrollee.
Prohibits HMO's from imposing certain restrictions regarding provision of health care services to enrollees.