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Passed on 1/12/06, Public Law 2005, Chapter 352 provides some relief to hospitals and physicians relating to how payors authorize, process and pay claims. The guidance provided in the new law will become effective 180 days from the adoption or 7/11/06. Key provisions include:

1. The health insurer must respond to a hospital or physician's request for authorization of service by either approving or denying the request based on a utilization management decision. Any denial of a request or limitation imposed by a payer on a requested service must be made by a State-licensed physician and must be communicated within the time frames provided in the bill. If the payer does not respond to the request within the applicable time frame, the request shall be deemed approved, and the payer shall be responsible for payment of the covered services. Payment of services provided by a network hospital shall be based on the contracted rate.



2. The law requires payers to provide, through an Internet website, information that describes the payers' utilization management and claims processing and payment policies. The information or changes in the information must be posted 30 days before becoming effective.



3. Health care providers are authorized to appeal on behalf of a covered person, only with the covered person's consent, a payer's utilization management decision to the Independent Health Care Appeals Program established pursuant to section 11 of P.L.1997, c.192 (C.26:25-11). The consent may be obtained at any time and may be revoked by the covered person at any time. Currently under regulation, health care providers are authorized to appeal on a covered person's behalf with his consent. The provider shall notify the covered person as to the progress of the appeal and shall bear all costs associated with the appeal that are normally paid by the covered person. These do not change the type of appeals that can be accepted into the appeals process.



4. A claim, so long as it meets the standards set forth in the bill, must be paid within 30 days, if the claim was submitted electronically, or 40 days, if it was submitted by means other than electronic form. If a claim is not paid within 30 or 40 days, as applicable, the payer shall communicate to the health care provider the reasons, as enumerated in the bill, the claim will not be paid.




5.   The bill requires early notification of nonpayment claims that cannot be adjudicated because of missing diagnosis coding or any other missing data. The payer shall electronically notify a health care provider or its agent within 7 days if an electronically submitted claim is missing various technical data. After receiving the data, the payer has 30 days to pay the claim or notify the provider of nonpayment.

6.   A claim will be considered overdue if the submitting health care provider is not paid or notified of nonpayment within the time frames established in the bill. Overdue claims shall accrue interest at 12% per annum, up from the previous 10%.


5. Except in cases of fraud, the bill limits to 18 months the time frame in which a payer can seek reimbursement from a provider for overpayment of a claim. Likewise, a health care provider shall only seek reimbursement for underpayment of a claim within 18 months from the date the first payment was received. The bill describes the circumstances in which the payer may seek reimbursement and the procedures through which the payer may collect the reimbursement funds.



6. The bill established a two-part appeals process to resolve disputes concerning compliance with the provisions regarding utilization management and the processing and payment of claims. No dispute concerning medical necessity, which is eligible to be submitted to the Independent Health Care Appeals Program, shall be subject to the appeal process established by the bill. The process involves an internal appeals mechanism, and if applicable, is followed by nonappealable, binding arbitration conducted by an independent arbitrator contracted by the Commissioner of Banking and Insurance.



7. The Commissioner is empowered to enforce the provisions of the bill concerning utilization management and claims processing and payment, and the bill sets forth civil penalties for violation of the bill's provisions.



8. To increase the efficiency of claims processing and payment, the bill requires an advisory board already established under law to make recommendations to include a Statewide policy on electronic health records with the State's health information electronic data interchange technology policy. Further, any State department that uses medical records or health care claims shall participate on the board, and if asked, provide assistance to Thomas Edison State College in its project to monitor the effectiveness of the State's health information technology policy.