SENATE, No. 46

 

STATE OF NEW JERSEY

 

INTRODUCED JANUARY 18, 1996

 

 

By Senators LITTELL and LaROSSA

 

 

An Act requiring prompt payment of health insurance claims, supplementing P.L.1938, c.366 (C.17:48-1 et seq.), P.L.1940, c.74 (C.17:48A-1 et seq.) and P.L.1985, c.236 (C.17:48E-1 et seq.), and amending P.L.1991, c.187.

 

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

 

    1. (New section) a. A hospital service corporation shall reimburse all claims or any portion of any claim from a subscriber or a subscriber's assignee, for payment under a group or individual hospital service corporation contract, within 30 days after receipt of the claim by the hospital service corporation. If a claim or a portion of a claim is contested by the hospital service corporation, the subscriber or the subscriber's assignee shall be notified in writing within 25 days after receipt of the claim by the hospital service corporation, that the claim is contested or denied; except that, the uncontested portion of the claim shall be paid within 30 days after receipt of the claim by the hospital service corporation. The notice that a claim is contested shall identify the contested portion of the claim and the reasons for contesting the claim.

    A hospital service corporation, upon receipt of the additional information requested from the subscriber or the subscriber's assignee, shall pay or deny the contested claim or portion of the contested claim, within 45 days.

    Payment shall be treated as being made on the date a draft or other valid instrument which is equivalent to payment was placed in the United States mail in a properly addressed, postpaid envelope or, if not so posted, on the date of delivery, or the date of electronic fund transfer.

    A subscriber or a subscriber's assignee shall provide written notice of a claim to a hospital service corporation no later than 21 days following the commencement of health care services, and every bill or invoice shall be submitted to the hospital service corporation: (1) if submitted by the subscriber's assignee, within 30 days of the date on which any health care services included in the bill or invoice were provided; or (2) if submitted by a subscriber, within 10 days of the receipt of the bill or invoice from the provider of services.

    b. An overdue payment shall bear simple interest, commencing on the 31st day after the claim is submitted, at the periodic rate for any calendar quarter which shall not exceed the prime rate as published in the Wall Street Journal on the first business day of the immediately preceding calendar quarter plus an additional 5%, rounded to the nearest one quarter of 1%, per annum.

    c. The Department of Insurance shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to carry out the provisions of this section.

 

    2. (New section) a. A medical service corporation shall reimburse all claims or any portion of any claim from a subscriber or a subscriber's assignee, for payment under a group or individual medical service corporation contract, within 30 days after receipt of the claim by the medical service corporation. If a claim or a portion of a claim is contested by the medical service corporation, the subscriber or the subscriber's assignee shall be notified in writing within 25 days after receipt of the claim by the medical service corporation, that the claim is contested or denied; except that, the uncontested portion of the claim shall be paid within 30 days after receipt of the claim by the medical service corporation. The notice that a claim is contested shall identify the contested portion of the claim and the reasons for contesting the claim.

    A medical service corporation, upon receipt of the additional information requested from the subscriber or the subscriber's assignee, shall pay or deny the contested claim or portion of the contested claim, within 45 days.

    Payment shall be treated as being made on the date a draft or other valid instrument which is equivalent to payment was placed in the United States mail in a properly addressed, postpaid envelope or, if not so posted, on the date of delivery, or the date of electronic fund transfer.

    A subscriber or a subscriber's assignee shall provide written notice of a claim to a medical service corporation no later than 21 days following the commencement of health care services, and every bill or invoice shall be submitted to the medical service corporation: (1) if submitted by the subscriber's assignee, within 30 days of the date on which any health care services included in the bill or invoice were provided; or (2) if submitted by a subscriber, within 10 days of the receipt of the bill or invoice from the provider of services.

    b. An overdue payment shall bear simple interest, commencing on the 31st day after the claim is submitted, at the periodic rate for any calendar quarter which shall not exceed the prime rate as published in the Wall Street Journal on the first business day of the immediately preceding calendar quarter plus an additional 5%, rounded to the nearest one quarter of 1%, per annum.

    c. The Department of Insurance shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to carry out the provisions of this section.

 

    3. (New section) a. A health service corporation shall reimburse all claims or any portion of any claim from a subscriber or a subscriber's assignee, for payment under a group or individual health service corporation contract, within 30 days after receipt of the claim by the health service corporation. If a claim or a portion of a claim is contested by the health service corporation, the subscriber or the subscriber's assignee shall be notified in writing within 25 days after receipt of the claim by the health service corporation, that the claim is contested or denied; except that, the uncontested portion of the claim shall be paid within 30 days after receipt of the claim by the health service corporation. The notice that a claim is contested shall identify the contested portion of the claim and the reasons for contesting the claim.

    A health service corporation, upon receipt of the additional information requested from the subscriber or the subscriber's assignee, shall pay or deny the contested claim or portion of the contested claim, within 45 days.

    Payment shall be treated as being made on the date a draft or other valid instrument which is equivalent to payment was placed in the United States mail in a properly addressed, postpaid envelope or, if not so posted, on the date of delivery, or the date of electronic fund transfer.

    A subscriber or a subscriber's assignee shall provide written notice of a claim to a health service corporation no later than 21 days following the commencement of health care services, and every bill or invoice shall be submitted to the health service corporation: (1) if submitted by the subscriber's assignee, within 30 days of the date on which any health care services included in the bill or invoice were provided; or (2) if submitted by a subscriber, within 10 days of the receipt of the bill or invoice from the provider of services.

    b. An overdue payment shall bear simple interest, commencing on the 31st day after the claim is submitted, at the periodic rate for any calendar quarter which shall not exceed the prime rate as published in the Wall Street Journal on the first business day of the immediately preceding calendar quarter plus an additional 5%, rounded to the nearest one quarter of 1%, per annum.

    c. The Department of Insurance shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to carry out the provisions of this section.

 

    4. Section 78 of P.L.1991, c.187 (C.17B:26-12.1) is amended to read as follows:

    78. a. A health insurer shall reimburse all claims or any portion of any claim from an insured or an insured's assignee, for payment under a health insurance policy, within [60] 30 days after receipt of the claim by the health insurer. If a claim or a portion of a claim is contested by the health insurer, the insured or the insured's assignee shall be notified in writing within [45] 25 days after receipt of the claim by the health insurer, that the claim is contested or denied; except that, the uncontested portion of the claim shall be paid within [60] 30 days after receipt of the claim by the health insurer. The notice that a claim is contested shall identify the contested portion of the claim and the reasons for contesting the claim.

    A health insurer, upon receipt of the additional information requested from the insured or the insured's assignee, shall pay or deny the contested claim or portion of the contested claim, within [90] 45 days.

    Payment shall be treated as being made on the date a draft or other valid instrument which is equivalent to payment was placed in the United States mail in a properly addressed, postpaid envelope or, if not so posted, on the date of delivery, or the date of electronic fund transfer.

    An insured or an insured's assignee shall provide written notice of a claim to a health insurer no later than 21 days following the commencement of health care services, and every bill or invoice shall be submitted to the health insurer: (1) if submitted by the insured's assignee, within 30 days of the date on which any health care services included in the bill or invoice were provided; or (2) if submitted by an insured, within 10 days of the receipt of the bill or invoice from the provider of services.

    b. An overdue payment shall bear simple interest [at the rate of 10% per year], commencing on the 31st day after the claim is submitted, at the periodic rate for any calendar quarter which shall not exceed the prime rate as published in the Wall Street Journal on the first business day of the immediately preceding calendar quarter plus an additional 5%, rounded to the nearest one quarter of 1%, per annum.

    c. For the purposes of this section, "health insurer" means an insurer authorized to provide health insurance on an individual basis pursuant to chapter 26 of Title 17B of the New Jersey Statutes.

    d. The Department of Insurance shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to carry out the provisions of this section.

(cf: P.L.1991, c.187, s.78)

 

    5. Section 79 of P.L.1991, c.187 (C.17B:27-44.1) is amended to read as follows:

    79. a. A health insurer shall reimburse all claims or any portion of any claim from an insured or an insured's assignee, for payment under a health insurance policy, within [60] 30 days after receipt of the claim by the health insurer. If a claim or a portion of a claim is contested by the health insurer, the insured or the insured's assignee shall be notified in writing within [45] 25 days after receipt of the claim by the health insurer, that the claim is contested or denied; except that, the uncontested portion of the claim shall be paid within [60] 30 days after receipt of the claim by the health insurer. The notice that a claim is contested shall identify the contested portion of the claim and the reasons for contesting the claim.

    A health insurer, upon receipt of the additional information requested from the insured or the insured's assignee, shall pay or deny the contested claim or portion of the contested claim, within [90] 45 days.

    Payment shall be treated as being made on the date a draft or other valid instrument which is equivalent to payment was placed in the United States mail in a properly addressed, postpaid envelope or, if not so posted, on the date of delivery, or the date of electronic fund transfer.

    An insured or an insured's assignee shall provide written notice of a claim to a health insurer no later than 21 days following the commencement of health care services, and every bill or invoice shall be submitted to the health insurer: (1) if submitted by the insured's assignee, within 30 days of the date on which any health care services included in the bill or invoice were provided; or (2) if submitted by an insured, within 10 days of the receipt of the bill or invoice from the provider of services.

    b. An overdue payment shall bear simple interest [at the rate of 10% per year], commencing on the 31st day after the claim is submitted, at the periodic rate for any calendar quarter which shall not exceed the prime rate as published in the Wall Street Journal on the first business day of the immediately preceding calendar quarter plus an additional 5%, rounded to the nearest one quarter of 1%, per annum.

    c. For the purposes of this section, "health insurer" means an insurer authorized to provide health insurance on a group basis pursuant to chapter 27 of Title 17B of the New Jersey Statutes.

    d. The Department of Insurance shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to carry out the provisions of this section.

(cf: P.L.1991, c.187, s.79)

 

    6. Section 80 of P.L.1991, c.187 (C.26:2J-5.1) is amended to read as follows:

    80. a. A health maintenance organization shall reimburse all claims or any portion of any claim from an enrollee or an enrollee's assignee, for payment under health maintenance organization coverage, within [60] 30 days after receipt of the claim by the health maintenance organization. If a claim or a portion of a claim is contested by the health maintenance organization, the enrollee or the enrollee's assignee shall be notified in writing within [45] 25 days after receipt of the claim by the health maintenance organization, that the claim is contested or denied; except that, the uncontested portion of the claim shall be paid within [60] 30 days after receipt of the claim by the health maintenance organization. The notice that a claim is contested shall identify the contested portion of the claim and the reasons for contesting the claim.

    A health maintenance organization, upon receipt of the additional information requested from the enrollee or the enrollee's assignee, shall pay or deny the contested claim or portion of the contested claim, within [90] 45 days.

    Payment shall be treated as being made on the date a draft or other valid instrument which is equivalent to payment was placed in the United States mail in a properly addressed, postpaid envelope or, if not so posted, on the date of delivery, or the date of electronic fund transfer.

    An enrollee or an enrollee's assignee shall provide written notice of a claim to a health maintenance organization no later than 21 days following the commencement of health care services, and every bill or invoice shall be submitted to the health maintenance organization: (1) if submitted by the enrollee's assignee, within 30 days of the date on which any health care services included in the bill or invoice were provided; or (2) if submitted by an enrollee, within 10 days of the receipt of the bill or invoice from the provider of services.

    b. An overdue payment shall bear simple interest [at the rate of 10% per year], commencing on the 31st day after the claim is submitted, at the periodic rate for any calendar quarter which shall not exceed the prime rate as published in the Wall Street Journal on the first business day of the immediately preceding calendar quarter plus an additional 5%, rounded to the nearest one quarter of 1%, per annum.

    c. For the purposes of this section, "health maintenance organization" means a health maintenance organization authorized pursuant to the provisions of P.L.1973, c.337 (C.26:2J-1 et seq.).

    d. The Department of Health shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to carry out the provisions of this section.

(cf: P.L.1991, c.187, s.80)


    7. This act shall take effect immediately.

 

 

STATEMENT

 

    This bill amends the "prompt payment" requirements of the "Health Care Cost Reduction Act," P.L.1991, c.187 (C.26:2H-18.24 et al.) to require that all uncontested health insurance claims be paid by commercial health insurers and health maintenance organizations (HMO's) within 30 days (rather than 60 days as the law currently provides). The bill would also implement these prompt payment requirements for other carriers. In addition, the bill requires that written notice of a claim be provided to a carrier no later than 21 days following the commencement of health care services, and further requires timely submission of bills and invoices to the carrier.

    This bill is intended to motivate health insurers and HMO's to implement electronic claims processing systems, which will result in administrative savings for health insurers and HMO's by reducing their claim processing costs and for health care providers by improving their cash flow. The bill is part of a legislative package designed to effectuate the recommendations of the Healthcare Information Networks and Technologies (HINT) report to the Legislature under the joint auspices of Thomas Edison State College and the New Jersey Institute of Technology.

 

 

                             

Requires payment of health insurance claims in 30 days.