[First Reprint]

SENATE, No. 1827

STATE OF NEW JERSEY

INTRODUCED JANUARY 29, 1997

By Senator BASSANO

An Act concerning limited purpose managed health services organizations and supplementing Title 17B of the New Jersey Statutes.

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

    1. An entity shall not contract with the Division of Medical Assistance and Health Services or the Division of Mental Health Services in the Department of Human Services, or with the Division of Addiction Services in the Department of Health and Senior Services, to offer comprehensive specialized mental health or substance abuse services on a prepaid contractual basis to recipients of the State Medicaid program, P.L.1968, c.413 (C.30:4D-1 et seq.), Medicare program pursuant to Title XVIII of the federal Social Security Act (42 U.S.C. §1395 et seq.) or other publicly funded services, unless that entity is issued a certificate of authority for a limited purpose managed health services organization pursuant to this act ¹or a certificate of authority to operate a health maintenance organization pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.)¹.

    ¹[The]An¹ entity ¹[shall apply to the Department of Banking and Insurance for] seeking¹ a limited purpose managed health services organization certificate of authority pursuant to this act ¹ shall apply to the Department of Banking and Insurance¹ and shall submit such information about the entity and remit such application fees as shall be required by the Commissioner of Banking and Insurance, by regulation.

    ¹A limited purpose managed health services organization which is issued a certificate of authority pursuant to this act shall be restricted to furnishing specialized mental health or substance abuse services to participants in publicly funded programs, including, but not limited to, Medicaid and Medicare.¹

    2. a. Following receipt of an application for a certificate of authority, the Commissioner of Banking and Insurance shall review it in consultation with the Commissioners of Health and Senior Services and Human Services and notify the applicant of any deficiencies contained therein.

    The Commissioner of Banking and Insurance shall determine whether the applicant is financially sound and may reasonably be expected to meet its obligations to recipients. The commissioner may require the applicant, if he deems it necessary in order to ensure that the applicant will be able to meet its obligations to recipients, to:

     (1) deposit with the commissioner or with an entity or trustee acceptable to the commissioner through which a custodial or controlled account is utilized, cash, securities or any combination of these or other measures that is acceptable to the commissioner in an amount established by the commissioner; or

    (2) purchase stop-loss insurance in an amount specified by the commissioner.

    b. The commissioner shall issue the certificate of authority if he finds that the entity meets the standards required by the Department of Banking and Insurance and the Departments of Health and Senior Services and Human Services pursuant to this act.

    c. The certificate of authority shall be valid for three years and may be renewed in accordance with regulations adopted by the commissioner.

    3. a. The Commissioner of Banking and Insurance, in consultation with the Commissioners of Health and Senior Services and Human Services shall adopt regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to carry out the purposes of this act. The regulations shall include standards regarding financial solvency of limited purpose managed health services organizations ¹, including, but not limited to, capital and reserve requirements, financial reporting, financial examination by the Commissioner of Banking and Insurance, fees, fines and penalties, as well as standards and procedures for the conservation, rehabilitation and liquidation of limited purpose managed health services organizations ¹.

    b. The Commissioners of Health and Senior Services and Human Services, respectively, shall adopt regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) regarding standards for comprehensive specialized services provided by limited purpose managed health services organizations ¹ or health maintenance organizations¹ for which their respective departments may contract pursuant to this act.

    ¹4. The Commissioner of Banking and Insurance, in determining whether to issue a certificate of authority for a limited purpose managed health services organization pursuant to this act, and the Division of Medical Assistance and Health Services or the Division of Mental Health Services in the Department of Human Services or the Division of Addiction Services in the Department of Health and Senior Services, in awarding contracts for the provision of comprehensive specialized mental health or substance abuse services pursuant to this act, shall not discriminate among classes of providers on grounds unrelated to their demonstrated effectiveness and efficiency in providing those services.

    As used in this section, "provider" means a managed care organization or other health care delivery system such as, but not limited to, a preferred provider organization, network or affiliation of networks which is adequate to provide access to quality health care services in an efficient manner.¹

    ¹[4.] 5.¹ This act shall take effect immediately.

Authorizes Commissioner of Banking and Insurance to issue certificate of authority to certain limited purpose managed health services organizations.