Bill Text: NJ A1977 | 2010-2011 | Regular Session | Introduced
Bill Title: Makes reforms to "Health Care Quality Act;" requires audits of provider networks.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-02-08 - Introduced, Referred to Assembly Health and Senior Services Committee [A1977 Detail]
Download: New_Jersey-2010-A1977-Introduced.html
Sponsored by:
Assemblyman HERB CONAWAY, JR.
District 7 (Burlington and Camden)
SYNOPSIS
Makes reforms to "Health Care Quality Act;" requires audits of provider networks.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning health care coverage and revising various parts of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) Notwithstanding any other law to the contrary, a carrier shall not deliver, issue, execute, or renew a health benefits plan in this State on or after the effective date of this act until the carrier files with the Commissioner of Banking and Insurance its rates, rating schedule, and any supporting documentation the commissioner deems necessary, and the carrier receives the approval of the commissioner. The commissioner, through regulations, shall prescribe the procedures for filing for approval, including the time period for the commissioner to review the filing and provide a response to the carrier. The commissioner may disapprove the filing at any time if he finds that the rates are excessive, inadequate, or unfairly discriminatory.
2. (New section) A carrier which offers a managed care plan shall provide for an annual audit of its provider network by a private auditing firm. The audit shall be at the expense of the carrier and the carrier shall submit the audit findings to the commissioner. If the audit contains a determination that a carrier has failed to maintain an adequate network of providers in accordance with applicable federal or State law, the commissioner shall impose a civil penalty of not less than $500 nor more than $10,000 upon the carrier for each instance in which the audit determines that the carrier failed to maintain an adequate network. The civil penalty shall be collected by the commissioner pursuant to the "Penalty Enforcement Law of 1999" P.L.1999 c.274 (C.2A:58-10 et seq.).
3. (New section) The commissioner shall establish by regulation an acceptable amount of surplus a carrier may maintain. For purposes of determining the amount of acceptable surplus, the commissioner shall consider the National Association of Insurance Commissioner's Risk Based Capital formula ratios. A carrier shall not maintain a surplus in excess of the acceptable amount established by the commissioner. Any excess surplus amount maintained by a carrier in violation of this section shall be deposited annually in the "New Jersey Health Care Improvement Fund" established pursuant to section 4 of this act.
4. (New section) a. There is established in the Department of Health and Senior Services a nonlapsing, revolving fund, to be known as the "New Jersey Health Care Improvement Fund." This fund shall consist of monies deposited by carriers pursuant to section 3 of this act.
b. The monies collected in the fund shall be dedicated, and may be allocated through procedures established by the Commissioner of Health and Senior Services, solely for the purposes of expanding access to affordable, quality health care for underserved individuals, and promoting fundamental improvements in the health status of New Jersey residents. Monies in the fund may be utilized to supplement any existing State program, grant, initiative, or fund, provided the purposes of the program, grant, initiative, or fund are consistent with those set forth in this subsection.
5. Section 8 of P.L.1992, c.161 (C.17B:27A-9) is amended to read as follows:
8. a. (Deleted by amendment, P.L.2008, c.38).
b. The board shall make application on behalf of all carriers for any other subsidies, discounts, or funds that may be provided for under State or federal law or regulation. A carrier may include subsidies or funds granted to the board to reduce its premium rates for individual health benefits plans subject to this act.
c. [A] Except as provided in section 1 of P.L. c. (C. ) (pending before the Legislature as this bill) a carrier shall not issue individual health benefits plans on a new contract or policy form pursuant to this act until an informational filing of a full schedule of rates which applies to the contract or policy form has been filed with the commissioner. The commissioner shall provide a copy of the informational filing to the Attorney General and the board.
d. A carrier desiring to increase or decrease premiums for any contract or policy form may implement that increase or decrease upon making an informational filing with the commissioner of that increase or decrease, along with the actuarial assumptions and methods used by the carrier in establishing that increase or decrease. The commissioner may disapprove any informational filing on a finding that it is incomplete and not in substantial compliance with P.L.1992, c.161 (C.17B:27A-2 et al.), or that the rates are inadequate or unfairly discriminatory.
e. (1) Rates shall be formulated on contracts or policies required pursuant to section 3 of this act so that the anticipated minimum loss ratio for a contract or policy form shall not be less than 80% of the premium. The carrier shall submit with its rate filing supporting data, as determined by the commissioner, and a certification by a member of the American Academy of Actuaries, or other individuals in a format acceptable to the commissioner, that the carrier is in compliance with the provisions of this subsection.
(2) Each calendar year, a carrier shall return, in the form of aggregate benefits for all of the policy or contract forms offered by the carrier pursuant to subsection a. of section 3 of P.L.1992, c.161 (C.17:B:27A-4), at least 80% of the aggregate premiums collected for all of the policy or contract forms during that calendar year. Carriers shall annually report, no later than August 1 of each year, the loss ratio calculated pursuant to this section for all of the policy or contract forms for the previous calendar year. In each case in which the loss ratio fails to comply with the 80% loss ratio requirement, the carrier shall issue a dividend or credit against future premiums for all policy or contract holders, as applicable, in an amount sufficient to assure that the aggregate benefits paid in the previous calendar year plus the amount of the dividends and credits equal 80% of the aggregate premiums collected for the policy or contract forms in the previous calendar year. All dividends and credits shall be distributed by December 31 of the year following the calendar year in which the loss ratio requirements were not satisfied. The annual report required by this subsection shall include a carrier's calculation of the dividends and credits applicable to all policy or contract forms, as well as an explanation of the carrier's plan to issue dividends or credits. The instructions and format for calculating and reporting loss ratios and issuing dividends or credits shall be specified by the commissioner by regulation. Those regulations shall include provisions for the distribution of a dividend or credit in the event of cancellation or termination by a policyholder.
f. (Deleted by amendment, P.L.2008, c.38).
(cf: P.L. 2008, c.38, s.16)
6. Section 5 of P.L.1995, c.196 (C.17B:27A-16.5) is amended to read as follows:
5. [A] Except as provided in section 1 of P.L. c. (C. ) (pending before the Legislature as this bill) a domestic mutual insurer which has converted from a health service corporation pursuant to the provisions of sections 2 through 4 of P.L.1995, c.196 (C.17:48E-46 through C.17:48E-48) shall not renew individual hospital or medical insurance policies or health service contracts originally issued prior to November 30, 1992, until it has made an informational filing with the commissioner. The rates shall be formulated so that the anticipated minimum loss ratio for such policy or contract form shall not be less than 80% of the premium. Such domestic mutual insurer shall submit with its rate filing supporting data and a certification that the insurer is in compliance with the anticipated loss ratio requirement. The content and form of the supporting data and certification required pursuant to subsection e. of section 8 of P.L.1992, c.161 (C.17B:27A-9) shall satisfy the requirements of this section. Any other insurer may irrevocably elect to become subject to the provisions of this section by written notice to the commissioner in a format specified by the commissioner.
(cf: P.L.2008, c.38, s.19)
7. Section 9 of P.L.1992, c.162 (C.17B:27A-25) is amended to read as follows:
9. a. (1) (Deleted by amendment, P.L.1997, c.146).
(2) (Deleted by amendment, P.L.1997, c.146).
(3) (a) For all policies or contracts providing health benefits plans for small employers issued pursuant to section 3 of P.L.1992, c.162 (C.17B:27A-19), and including policies or contracts offered by a carrier to a small employer who is a member of a Small Employer Purchasing Alliance pursuant to the provisions of P.L.2001, c.225 (C.17B:27A-25.1 et al.) the premium rate charged by a carrier to the highest rated small group purchasing a small employer health benefits plan issued pursuant to section 3 of P.L.1992, c.162 (C.17B:27A-19) shall not be greater than 200% of the premium rate charged for the lowest rated small group purchasing that same health benefits plan; provided, however, that the only factors upon which the rate differential may be based are age, gender and geography. Such factors shall be applied in a manner consistent with regulations adopted by the commissioner. For the purposes of this paragraph (3), policies or contracts offered by a carrier to a small employer who is a member of a Small Employer Purchasing Alliance shall be rated separately from the carrier's other small employer health benefits policies or contracts.
(b) A health benefits plan issued pursuant to subsection j. of section 3 of P.L.1992, c.162 (C.17B:27A-19) shall be rated in accordance with the provisions of section 7 of P.L.1995, c.340 (C.17B:27A-19.3), for the purposes of meeting the requirements of this paragraph.
(4) (Deleted by amendment, P.L.1994, c.11).
(5) Any policy or contract issued after January 1, 1994 to a small employer who was not previously covered by a health benefits plan issued by the issuing small employer carrier, shall be subject to the same premium rate restrictions as provided in paragraph (3) of this subsection, which rate restrictions shall be effective on the date the policy or contract is issued.
(6) The board shall establish, pursuant to section 17 of P.L.1993, c.162 (C.17B:27A-51):
(a) up to six geographic territories, none of which is smaller than a county; and
(b) age classifications which, at a minimum, shall be in five-year increments.
b. (Deleted by amendment, P.L.1993, c.162).
c. (Deleted by amendment, P.L.1995, c.298).
d. Notwithstanding any other provision of law to the contrary, this act shall apply to a carrier which provides a health benefits plan to one or more small employers through a policy issued to an association or trust of employers.
A carrier which provides a health benefits plan to one or more small employers through a policy issued to an association or trust of employers after the effective date of P.L.1992, c.162 (C.17B:27A-17 et seq.), shall be required to offer small employer health benefits plans to non-association or trust employers in the same manner as any other small employer carrier is required pursuant to P.L.1992, c.162 (C.17B:27A-17 et seq.).
e. Nothing contained herein shall prohibit the use of premium rate structures to establish different premium rates for individuals and family units.
f. No insurance contract or policy subject to this act, including a contract or policy entered into with a small employer who is a member of a Small Employer Purchasing Alliance pursuant to the provisions of P.L.2001, c.225 (C.17B:27A-25.1 et al.), may be entered into unless and until the carrier has made an informational filing with the commissioner of a schedule of premiums, not to exceed 12 months in duration, to be paid pursuant to such contract or policy, of the carrier's rating plan and classification system in connection with such contract or policy, and of the actuarial assumptions and methods used by the carrier in establishing premium rates for such contract or policy.
g. (1) [Beginning] Except as provided in section 1 of P.L. c. (C. ) (pending before the Legislature as this bill) beginning January 1, 1995, a carrier desiring to increase or decrease premiums for any policy form or benefit rider offered pursuant to subsection i. of section 3 of P.L.1992, c.162 (C.17B:27A-19) subject to this act may implement such increase or decrease upon making an informational filing with the commissioner of such increase or decrease, along with the actuarial assumptions and methods used by the carrier in establishing such increase or decrease, provided that the anticipated minimum loss ratio for all policy forms shall not be less than 80% of the premium therefor as provided in paragraph (2) of this subsection. The commissioner may disapprove any informational filing on a finding that it is incomplete and not in substantial compliance with P.L.1992, c.162 (C.17B:27A-17 et seq.), or that the rates are inadequate or unfairly discriminatory. Until December 31, 1996, the informational filing shall also include the carrier's rating plan and classification system in connection with such increase or decrease.
(2) Each calendar year, a carrier shall return, in the form of aggregate benefits for all of the standard policy forms offered by the carrier pursuant to subsection a. of section 3 of P.L.1992, c.162 (C.17B:27A-19), at least 80% of the aggregate premiums collected for all of the standard policy forms, other than alliance policy forms, and at least 80% of the aggregate premiums collected for all of the non-standard policy forms during that calendar year. A carrier shall return at least 80% of the premiums collected for all of the alliances during that calendar year, which loss ratio may be calculated in the aggregate for all of the alliances or separately for each alliance. Carriers shall annually report, no later than August 1st of each year, the loss ratio calculated pursuant to this section for all of the standard, other than alliance policy forms, non-standard policy forms and alliance policy forms for the previous calendar year, provided that a carrier may annually report the loss ratio calculated pursuant to this section for all of the alliances in the aggregate or separately for each alliance. In each case where the loss ratio fails to substantially comply with the 80% loss ratio requirement, the carrier shall issue a dividend or credit against future premiums for all policyholders with the standard, other than alliance policy forms, nonstandard policy forms or alliance policy forms, as applicable, in an amount sufficient to assure that the aggregate benefits paid in the previous calendar year plus the amount of the dividends and credits shall equal 80% of the aggregate premiums collected for the respective policy forms in the previous calendar year. All dividends and credits must be distributed by December 31 of the year following the calendar year in which the loss ratio requirements were not satisfied. The annual report required by this paragraph shall include a carrier's calculation of the dividends and credits applicable to standard, other than alliance policy forms, non-standard policy forms and alliance policy forms, as well as an explanation of the carrier's plan to issue dividends or credits. The instructions and format for calculating and reporting loss ratios and issuing dividends or credits shall be specified by the commissioner by regulation. Such regulations shall include provisions for the distribution of a dividend or credit in the event of cancellation or termination by a policyholder. For purposes of this paragraph, "alliance policy forms" means policies purchased by small employers who are members of Small Employer Purchasing Alliances.
(3) The loss ratio of a health benefits plan issued pursuant to subsection j. of section 3 of P.L.1992, c.162 (C.17B:27A-19) shall be calculated in accordance with the provisions of section 7 of P.L.1995, c.340 (C.17B:27A-19.3), for the purposes of meeting the requirements of this subsection.
h. (Deleted by amendment, P.L.1993, c.162).
i. The provisions of this act shall apply to health benefits plans which are delivered, issued for delivery, renewed or continued on or after January 1, 1994.
j. (Deleted by amendment, P.L.1995, c.340).
k. A carrier who negotiates a reduced premium rate with a Small Employer Purchasing Alliance for members of that alliance shall provide a reduction in the premium rate filed in accordance with paragraph (3) of subsection a. of this section, expressed as a percentage, which reduction shall be based on volume or other efficiencies or economies of scale and shall not be based on health status-related factors.
(cf: P.L. 2008, c.38, s.24)
8. R.S.52:24-4 is amended to read as follows:
52:24-4 It shall be the duty of the State Auditor to conduct post-audits of all transactions and accounts kept by or for all departments, offices and agencies of the State Government, to report to the Legislature or to any committee thereof and to the Governor, and to the Executive Director of the Office of Legislative Services, as provided by this chapter and as shall be required by law, and to perform such other similar or related duties as shall, from time to time, be required of him by law.
The State Auditor shall personally or by any of his duly authorized assistants, or by contract with independent public accountant firms, examine and post-audit all the accounts, reports and statements and make independent verifications of all assets, liabilities, revenues and expenditures of the State, its departments, institutions, boards, commissions, officers, and any and all other State agencies, now in existence or hereafter created, hereinafter in this chapter called "accounting agencies."
The State Auditor shall conduct, at the direction of the Legislative Services Commission or of the presiding officer of either house of the Legislature or on the State Auditor's own initiative, a performance review audit of any program of any accounting agency, any independent authority, or any public entity or grantee that receives State funds, in a manner that is consistent with the Government Auditing Standards for performance audits utilized by the United States Government Accountability Office or its successor.
The State Auditor shall annually conduct a performance review audit of every health maintenance organization that contracts with the Department of Human Services to provide health care services for recipients of the Medicaid program pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.) in order to determine whether the health maintenance organizations individually and as a group have established and maintained provider networks that are accepting recipients of the Medicaid program as patients in accordance with the provisions of their contracts.
When the State Auditor conducts any audit or performance review audit, the accounting agency, or authority, entity [or], grantee, or health maintenance organization, shall respond in writing to each item in the State Auditor's report and the State Auditor, at an appropriate time determined by him, shall conduct a post-audit review of the accounting agency's, or authority's, entity's, [or] grantee's, or health maintenance organization's compliance with the State Auditor's recommendations.
The officers and employees of each accounting agency, or authority, entity, [or] grantee, or health maintenance organization, shall assist the State Auditor, when and as required by him, and provide the State Auditor with prompt access to all records necessary for the State Auditor to perform his duties, notwithstanding any statutory or regulatory requirements of confidentiality with regard to the records, for the purpose of carrying out the provisions of this chapter. The State Auditor shall report the failure of any accounting agency, or authority, entity, [or] grantee, or health maintenance organization, to provide prompt access to any relevant record to the presiding officer of each house of the Legislature. The State Auditor shall not disclose a confidential record provided by an accounting agency, or authority, entity, [or] grantee, or health maintenance organization, except as may be necessary for the State Auditor to fulfill his constitutional or statutory responsibilities. Working papers prepared by the State Auditor shall be confidential and shall not be considered government records under P.L.1963, c.73 (C.47:1A-1 et seq.).
Notwithstanding any law to the contrary, post-audits and performance review audits shall be conducted within the limits of the resources and personnel available to the State Auditor. If resources and personnel are insufficient to conduct all such required post-audits and performance review audits, the State Auditor may prioritize certain audits and forgo others upon notice to the Governor and the presiding officer of each house of the Legislature.
(cf: P.L.2006, c.82, s.1)
9. (New section) For each instance in which the State Auditor determines, pursuant to R.S.52:24-4, that a health maintenance organization has not established or maintained a provider network that accepts recipients of the Medicaid program as patients in accordance with the provisions of its contract with the Department of Human Services to provide health care services for recipients of the Medicaid program pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), the Commissioner of Human Services shall impose a civil penalty of not less than $500 nor more than $10,000. The commissioner shall collect the penalty pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (2A:58-10 et seq.).
10. This act shall take effect on the 60th day following enactment.
STATEMENT
To improve the systems through which health benefits are provided to New Jersey residents, this bill makes various reforms to how carriers provide health benefits plans, establishes a New Jersey Health Care Improvement Fund, and requires audits to ensure that consumers have access to adequate provider networks with respect to managed care plans and Medicaid contracts.
The bill supplements the existing consumer safeguards with respect to health benefits plans and managed care plans provided by carriers under the "Health Care Quality Act," P.L.1997, c.192, (C.26:2S-1 et seq.), as follows:
· A carrier providing a health benefits plan must file its rates and obtain prior approval from the Commissioner of Banking and Insurance before using the rates, as opposed to making just an informational filing as currently allowed.
· A carrier which offers a managed care plan shall provide for an annual audit of its provider network, at its own expense, by a private auditing firm. If the audit finds that a carrier failed to maintain an adequate network in accordance with applicable federal or State law, the commissioner shall impose a civil penalty of not less than $500 nor more than $10,000 upon the carrier for each instance in which the audit determines that the carrier failed to maintain an adequate network.
· The commissioner shall establish by regulation the acceptable amount of surplus a carrier may maintain. For purposes of determining the amount of acceptable surplus, the commissioner shall consider the National Association of Insurance Commissioner's Risk Based Capital formula ratios. Any excess surplus amount shall be deposited annually in the "New Jersey Health Care Improvement Fund" established by the bill.
· The monies collected in the New Jersey Health Care Improvement Fund shall be allocated, through procedures established by the Commissioner of Health and Senior Services, solely for the purposes of expanding access to affordable, quality health care for underserved individuals, and promoting fundamental improvements in the health status of New Jersey residents.
Finally, the bill requires the State Auditor to annually conduct a performance review audit of every health maintenance organization that contracts with the Department of Human Services to provide health care services for recipients of the Medicaid program pursuant to the "New Jersey Medical Assistance and Health Services Act," P.L.1968, c.413 (C.30:4D-1 et seq.). The Commissioner of Human Services shall impose a civil penalty of not less than $500 nor more than $10,000 upon a health maintenance organization for each instance in which the State Auditor determines that the health maintenance organization has not established or maintained a provider network that accepts recipients of the Medicaid program as patients in accordance with the provisions of its contract. The commissioner shall collect the penalty pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (2A:58-10 et seq.).
