ASSEMBLY INSURANCE COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 1405

STATE OF NEW JERSEY

DATED: MARCH 3, 1997

      The Assembly Insurance Committee reports favorably Senate Bill No. 1405 (1R).

      This bill requires all prepaid prescription service organizations to obtain a certificate of authority from the Department of Banking and Insurance in order to operate in, and offer prepaid prescription services to, residents of this State. The bill provides that a prepaid prescription service organization shall be deemed to be a domestic insurer for the purposes of P.L.1970, c.22 (C.17:27A-1 et seq.) concerning insurance holding company systems and mergers with domestic insurers, and subject to the provisions of N.J.S.17B:30-1 et seq. concerning the regulation of trade practices in the business of life and health insurance.

      As defined in the bill, a prepaid prescription service organization is an entity which, in return for a prepayment by a contract holder, undertakes to provide or arrange for the provision of prescription services, such as prescription drugs, utilization review and durable medical goods, to enrollees, their dependents and contract holders.

      The bill specifies the information about the prepaid prescription service organization that must be filed with the commissioner in the organization's application for a certificate of authority and establishes levels of net equity that the organization must maintain.

      Also, the bill provides that every contract holder and enrollee shall be issued an evidence of coverage, which shall contain a clear and complete statement of:

      a. The coverage to which each enrollee is entitled;

      b. Any limitation to which covered services are subject, including, but not limited to, exclusions, deductibles, copayments or other charges;

      c. Where information is available as to where and how services may be obtained; and

      d. The method for resolving complaints.

      Also, the bill provides that a prepaid prescription service organization shall establish and maintain a complaint system providing reasonable procedures for resolving written complaints which are initiated by enrollees and providers, in accordance with minimum standards established by the Commissioner of Banking and Insurance by regulation. The complaint procedure shall be in writing and shall be made available to providers as well as contract holders and enrollees.