N.J. Stat. § 17B:32B-1 Short title.
1. This act shall be known and may be cited as the "New Jersey Insolvent Health Maintenance Organization Assistance Fund Act of 2000." L.2000,c.12,s.1.
N.J. Stat. tit. 17B, ch. 32B
N.J. Stat. tit. 17B, ch. 32B
in effectN.J. Stat. § 17B:32B-2 Purpose of act.
2. The purpose of this act is to protect, subject to certain limitations, covered individuals and providers against the failure or inability of HIP Health Plan of New Jersey, Inc. and American Preferred Provider Plan, Inc. to perform certain contractual obligations due to their insolvency. The act creates a funding mechanism and authorizes this funding mechanism to pay certain unpaid contractual obligations of these insolvent health maintenance organizations incurred prior to the date of their insolvency. In addition, providers of health care services must agree to forgive one-third of those unpaid contractual obligations due them to receive payment from the funding mechanism. This act is intended to provide only limited coverage of claims against HIP Health Plan of New Jersey, Inc. and American Preferred Provider Plan, Inc. This act is not intended to provide coverage for claims of creditors other than those of covered individuals or providers. L.2000,c.12,s.2.
N.J. Stat. § 17B:32B-3 Definitions relative to certain insolvent health maintenance organizations.
3. As used in this act: "Association" means the New Jersey Insolvent Health Maintenance Organization Assistance Association created by section 5 of this act. "Commissioner" means the Commissioner of Banking and Insurance. "Contractual obligation" means an obligation, arising from an agreement, policy, certificate or evidence of coverage, to a covered individual or provider incurred prior to the declaration of insolvency of a covered health maintenance organization that remains unpaid at the time of its insolvency, but does not include claims by former employees, including medical professional employees for deferred compensation, severance, vacation or other employment benefits. "Covered health maintenance organization contract" means a policy, certificate, evidence of coverage or contract for health care services issued in New Jersey by HIP Health Plan of New Jersey, Inc. or American Preferred Provider Plan, Inc., but shall not include any contract with an employer or other person to provide health care benefits on an administrative services only basis. "Covered individual" means an enrollee or member of HIP Health Plan of New Jersey, Inc. or American Preferred Provider Plan, Inc. "Department" means the Department of Banking and Insurance. "Eligible claim" means a claim for a covered service or benefit under a contract or policy issued by an insolvent health maintenance organization and provided by a provider or to a covered individual prior to the declaration of insolvency of an insolvent organization, but shall not include any claim filed after the claims bar date established by the Superior Court of New Jersey supervising the insolvent organizations. "Fund" means the New Jersey Insolvent Health Maintenance Organization Assistance Fund created pursuant to section 6 of this act. "Insolvent organization" means HIP Health Plan of New Jersey, Inc. or American Preferred Provider Plan, Inc. "Member organization" means a person who holds a certificate of authority to operate a health maintenance organization pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.), and includes any person whose certificate of authority has been suspended, revoked or nonrenewed. "Net written premiums received" means direct premiums as reported on the annual financial statement submitted pursuant to section 9 of P.L.1973, c.337 (C.26:2J-9). "Provider" means a physician, hospital or other person which is licensed or otherwise authorized by this State, or licensed or otherwise authorized under similar laws of another state, to provide health care services, and which provided health care services to covered individuals. As used in this act, provider also includes persons who incurred a contractual obligation as defined by this act by providing home health care services, durable medical equipment, physical therapy services, medical transportation, ambulance services or laboratory services to covered individuals. L.2000,c.12,s.3.
N.J. Stat. § 17B:32B-4 Payment for eligible services, benefits.
4. This act shall provide payment for eligible services or benefits under a covered health maintenance organization contract on an equitable basis to any covered individual or provider who is entitled to receive payment from HIP Health Plan of New Jersey, Inc. and American Preferred Provider Plan, Inc. for an eligible claim that remains unpaid. L.2000,c.12,s.4.
N.J. Stat. § 17B:32B-5 New Jersey Insolvent Health Maintenance Organization Assistance Association.
5. There is created a nonprofit legal entity to be known as the New Jersey Insolvent Health Maintenance Organization Assistance Association. All health maintenance organizations authorized to transact business in this State shall be and remain members of the association as a condition of their authority to transact business in this State. The association shall perform its functions under the plan of operation established and approved pursuant to section 10 of this act and shall exercise its powers through a board of directors established pursuant to section 7 of this act. The association shall be supervised by the commissioner and is subject to the provisions of this act. L.2000,c.12,s.5.
N.J. Stat. § 17B:32B-6 New Jersey Insolvent Health Maintenance Organization Assistance Fund.
6. a. For purposes of administration and assessment, the New Jersey Insolvent Health Maintenance Organization Assistance Fund is created, and shall be held in trust and maintained by the association as provided in this act for the purposes specified in this act. b. The New Jersey Insolvent Health Maintenance Organization Assistance Fund is created as a limited purpose trust fund consisting of not more than $100,000,000 as follows: (1) $50,000,000 to be deposited in the fund pursuant to section 17 of this act; and (2) an additional aggregate sum of not more than $50,000,000 collected through assessments over a three-year period as provided in section 9 of this act. Moneys deposited in the fund pursuant to this section shall be deposited with the State Treasurer in the State of New Jersey Cash Management Fund established pursuant to section 1 of P.L.1977, c.281 (C.52:18A-90.4), pending disbursement for the payment of eligible claims as provided in this act. c. Moneys deposited in the fund in accordance with this act shall be used by the association to pay eligible claims of the insolvent organizations and loss adjustment expenses associated with the claims, including the cost of claims adjudication. L.2000,c.12,s.6.
N.J. Stat. § 17B:32B-7 Board of directors.
7. a. The board of directors of the association shall consist of not less than five nor more than nine members, who shall be representative of the member organizations, serving terms as established in the plan of operation. The members of the board of directors shall be selected by a vote of the member organizations, subject to the approval of the commissioner, with each member organization entitled to one vote. Vacancies on the board of directors shall be filled for the remaining period of the term in the same manner as the initial appointment. b. To allow for the selection of the initial board of directors and the organization of the association, the commissioner shall give notice to all member organizations of the time and place of an organizational meeting no later than 30 days following the effective date of this act. If the member organizations have not selected a suitable board of directors no later than 30 days following the organizational meeting, the commissioner may appoint the initial members of the board of directors. c. In approving or appointing members to the board of directors, the commissioner shall consider, among other things, whether all member organizations are fairly represented. No representative of an association member that is exempt or becomes exempt from assessments pursuant to subsection e. of section 9 of this act shall be eligible for membership or remain on the board. d. Members of the board of directors may be reimbursed from the assets of the association for reasonable expenses incurred by them as members of the board of directors, but shall not otherwise be compensated by the association for their services. L.2000,c.12,s.7.
N.J. Stat. § 17B:32B-8 Maximum liability of association.
8. a. The maximum liability of the association for all coverage provided under this act shall be limited to the amount available from the New Jersey Insolvent Health Maintenance Organization Assistance Fund created in section 6 of this act. b. If the association fails to act within a reasonable period of time, the commissioner shall have the powers and duties of the association provided by this act with respect to the insolvent organizations. c. The commissioner shall, in consultation with the association, oversee the payment of eligible claims reimbursable pursuant to this act. d. The association shall have standing to appear before any court in this State with jurisdiction over the insolvent organizations. That standing shall extend to all matters germane to the powers and duties of the association, including, but not limited to, the payment of eligible claims as provided for in this act. The association shall also have the right to appear or intervene before a court in another state with jurisdiction over the insolvent organizations or with jurisdiction over a third party against whom the association may have rights through subrogation of the organization's enrollees. e. (1) Any person receiving payment for eligible claims under this act shall be deemed to have assigned the rights under, and any causes of action relating to, the covered health maintenance organization contract to the association to the extent of the payment received pursuant to this act, whether the payments are in full, or on account of, contractual obligations. The association may require an assignment to it of those rights and causes of action by any payee, policy or contract owner, beneficiary, member or enrollee as a condition precedent to the receipt of any right or payment conferred by this act upon that person. (2) The subrogation rights of the association under this subsection shall have the same priority against the assets of the insolvent organization as that possessed by the person entitled to receive payment under this act. (3) In addition to the rights of subrogation contained in paragraphs (1) and (2) of this subsection, the association shall have all common law rights of subrogation and any other equitable or legal remedy which would have been available to the insolvent organization or holder of a policy or contract with respect to that policy or contract. f. The association may: (1) enter into any contracts necessary or proper to carry out the provisions and purposes of this act; (2) sue or be sued, including taking any legal actions including a summary proceeding necessary or proper to recover any unpaid assessments imposed pursuant to section 9 of this act and to settle claims or potential claims against it; (3) borrow money to effectuate the purposes of this act. Any notes or other evidence of indebtedness of the association not in default shall be legal investment for domestic insurers and may be carried as admitted assets; (4) employ or retain persons necessary to handle the financial transactions of the association, and to perform other functions as are necessary or proper under this act, which may include, but shall not be limited to, the oversight of the adjudication of the claims of the insolvent organization in order to ensure conformance with subsection g. of this section and recommendations to the board with respect to any remedial action necessary for the adjudication of those claims; and (5) take any legal action necessary to avoid payment of improper claims. g. Claims shall be adjudicated in accordance with standard industry practice, subject to available documentation and information. The guidelines shall include, but shall not be limited to, the establishment of procedures to ensure that: (1) the eligible claims or other obligations are paid in accordance with the contractual reimbursement rate payable by the insolvent organization to a covered individual or provider to whom the payment is to be made; (2) claims submitted by providers or covered individuals for payment are for eligible services or benefits under the contract or policy issued by the insolvent organization, the persons receiving the eligible services or benefits were covered individuals, and the eligible services or benefits were rendered by an eligible provider; (3) in the case of a provider not in the network of the insolvent organization, any payment made to the provider in accordance with the provisions of section 15 of this act is made on the basis of reasonable and customary reimbursement and shall not be made at a rate that is disproportionate to the reimbursement rates applicable to network providers; and is made only on that portion of the payment due to the provider by the insolvent organization, net of any coinsurance payment due under the insolvent organization's contract with the covered individual; (4) eligible claims are paid in accordance with coordination of benefits regulations or contract provisions; (5) no eligible claims are paid that are duplicative; and (6) claims presented for payment are in compliance with the insolvent organization's utilization review requirements. Claims shall be deemed to be in compliance with respect to benefits or services reviewed by a representative that regularly conducted utilization review on behalf of the insolvent organization on the site of a provider prior to the date of insolvency. h. (1) At the discretion of the commissioner, the association shall employ the services of a consulting organization with expertise in the adjudication and payment of health benefits claims, other than an organization that is responsible for the payment of claims of the insolvent organizations pursuant to this act, to audit the adjudicated claims of the insolvent organization payable by the association pursuant to this act to determine whether they have been adjudicated in accordance with subsection g. of this section. The consulting organization shall employ procedures for the audit consistent with industry standards and in accordance with standards established by the board and approved by the commissioner, to determine if the adjudication of the claims of the insolvent organizations payable by the association pursuant to this act meets the standards set forth in subsection g. of this section. (2) The consulting organization shall recommend to the board and the commissioner any remedial measures that may be necessary to ensure the accurate and timely payment of eligible claims. (3) The cost for the audit of claims provided for in this subsection shall be borne by the members of the association as provided for in the plan of operation and shall not exceed $2,000,000, for which an assessment shall be made on each association member that is required to pay an assessment pursuant to section 9 of this act in proportion to the share its net premiums bear to the aggregate net premiums of all association members writing business in this State. L.2000,c.12,s.8.
N.J. Stat. § 17B:32B-9 Assessment of member organizations.
9. a. For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board of directors shall assess the member organizations an aggregate amount not to exceed $50,000,000, to be payable in installments, in a manner determined by the commissioner, and after notification to the board, over a period not to exceed three years, in amounts as may be sufficient to meet the periodic disbursements of the association as provided for in subsection b. of this section; provided, however, that the amount of the assessment for the twelve calendar months following the effective date of this act shall not be more than one-third of the aggregate assessment required to be paid pursuant to this subsection. Assessments shall be due not less than 30 days after prior written notice to the member organizations and shall accrue interest on and after the due date at the percentage of interest prescribed in the Rules Governing the Courts of the State of New Jersey for judgments, awards and orders for the payment of money. b. Fund moneys as set forth in subsection b. of section 6 of this act shall be deposited in an account in the name of the fund in the State of New Jersey Cash Management Fund established pursuant to section 1 of P.L.1977, c.281 (C.52:18A-90.4) and shall be disbursed by the State Treasurer from time to time as needed to pay eligible claims of the insolvent organizations, upon request of the commissioner, after notification to the commissioner by the board of the amount of the disbursement needed by the association to carry out its functions under this act. The funds so disbursed from the State of New Jersey Cash Management Fund shall be deposited in an account or accounts which are in the name of, and shall remain in the custody of, the association, and which account or accounts may be drawn upon as needed by a person designated to disburse funds of the association to covered individuals and providers to pay the eligible claims of the insolvent organizations. Accounts shall be maintained in accordance with the "Governmental Unit Deposit Protection Act," P.L.1970, c.236 (C.17:9-41 et seq.). Disbursements shall be made in the name of the association by a person authorized to disburse association funds to pay eligible claims, which disbursements shall be made in accordance with the plan of operation. The commissioner may direct the association to make an interim partial payment or payments on a pro rata basis to eligible providers or covered individuals of a portion of the aggregate eligible claims payable pursuant to this act, pending any future claims audit or other verification of the eligibility of a claim. The person authorized to disburse association funds to providers shall, in the case of such partial payment, notify the provider that the claim may be subject to retrospective verification or audit and all or part of the disbursement may be reclaimed as a result of the findings. The commissioner may also direct the association to make payment, interim or otherwise, for loss adjustment expenses, including claims adjudication. c. Assessments against member organizations shall be made in the proportion that the net written premiums received on health maintenance organization business in this State by each assessed member organization for the most recent calendar year for which premium information is available preceding the year in which the assessment is made bears to such premiums received on total health maintenance organization business in this State for that calendar year by all assessed member organizations. The net written premium paid to enroll Medicaid recipients in a Medicaid-contracting health maintenance organization, New Jersey Kid Care and similar State-sponsored programs, and Medicare Plus Choice plans shall not be used to calculate any assessment under this subsection. d. The amount of each member organization's assessment necessary to meet the requirements of the association with respect to the insolvent organizations under this act shall be determined annually as necessary to implement the purposes of this act, and shall be payable in accordance with subsection a. of this section. Computations of assessments under this section shall be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible. e. The association shall exempt, abate or defer, in whole or in part, the assessment of a member organization if, in the opinion of the commissioner, payment of the assessment would endanger the ability of the member organization to fulfill its contractual obligations or place the member organization in an unsafe or unsound financial condition. If an assessment against a member organization is exempted, abated or deferred, in whole or in part, the amount by which that assessment is exempted, abated or deferred shall be assessed against the other member organizations in a manner consistent with the basis for assessments set forth in subsection c. of this section. f. The board may provide in the plan of operation for a method of allocating funds among claims, whether relating to one or more insolvent organizations, when the funds available under this act as provided in subsection b. of section 6 of this act will be insufficient to cover anticipated eligible claims. If payment of an eligible claim or portion of a claim is delayed due to the insufficiency of funds available, the association shall not be required to pay, and shall have no liability to, any person for any interest or late charge for the period that the payment of that claim is delayed. g. The board may, by an equitable method established in the plan of operation, refund to member organizations and the State in proportion to the contribution of each organization, the amount by which the assets of the fund exceed the amount the board, in accordance with subsection e. of section 10 of this act, with the concurrence of the commissioner, finds necessary to carry out the obligations of the association, including assets accruing from assignment, subrogation, net realized gains and income from investments. h. In determining its schedule of charges or rates filed with the commissioner pursuant to subsection b. of section 8 of P.L.1973, c.337 (C.26:2J-8), or filed in accordance with any other law requiring such filing, no member organization shall include the amount paid or to be paid as assessments under this act, or any portion of that amount, unless the commissioner specifically determines after a separate filing by a member that exclusion of those assessments in determining its schedule of charges or rates will significantly and adversely affect the organization. Each member organization shall annually file a certification to the commissioner that demonstrates compliance with this subsection. i. The association shall issue to each organization paying an assessment pursuant to this act a certificate of contribution, in a form and manner prescribed by the commissioner, for the amount of the assessment so paid. All outstanding certificates shall be of equal dignity and priority without reference to amount or date of issue. A certificate of contribution may be shown by the organization in its financial statement as an asset in that form and manner and for the amount and period of time as the commissioner may approve. L.2000,c.12,s.9.
N.J. Stat. § 17B:32B-10 Submission of plan of operation.
10. a. (1) The association shall submit to the commissioner a plan of operation, and any amendments thereto, necessary or suitable to assure the fair, reasonable and equitable administration of the association and the fund. The plan of operation and any amendments thereto shall become effective upon the commissioner's written approval or at the expiration of 30 days after submission if it has not been disapproved. (2) If the association fails to submit a suitable plan of operation within 90 days following the effective date of this act, or if at any time thereafter the association fails to submit suitable amendments to the plan, the commissioner shall adopt a plan, or amendments as necessary, to implement the provisions of this act. The plan or amendments shall continue in force until modified by the commissioner or superseded by a plan submitted by the association and approved by the commissioner. b. All member organizations shall comply with the plan of operation. c. The plan of operation shall, in addition to any other requirements specified in this act: (1) establish procedures for handling the assets of the association, in accordance with the provisions of this act; (2) establish the method of reimbursing members of the board of directors under subsection d. of section 7 of this act; (3) establish regular places and times for meetings, including telephone conference calls, of the board of directors; (4) establish procedures for keeping records of all financial transactions of the association, its agents and the board of directors; (5) establish procedures for selecting members of the board of directors and submitting their names to the commissioner; (6) establish any additional procedures for the imposition of assessments under section 9 of this act; and (7) contain additional provisions necessary or proper for the execution of the powers and duties of the association. d. The plan of operation may provide for the delegation of any or all powers and duties of the association, except those set forth in paragraph (3) of subsection e. of section 8 and section 9 of this act, to a corporation, association or other organization which performs or will perform functions similar to those of the association, or its equivalent, in two or more other states. Such a corporation, association or organization shall be reimbursed for any payments made on behalf of the association and shall be paid for its performance of any function of the association. A delegation under this subsection shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association or organization which extends protection not substantially less favorable or effective than that provided by this act. e. The plan of operation shall provide for the orderly cessation of activity by the association upon the exhaustion of moneys in the New Jersey Insolvent Health Maintenance Organization Assistance Fund created in section 6 of this act, or upon the completion of the payment of eligible claims by the association pursuant to this act, whichever is earlier. Any moneys remaining in the fund upon the cessation of activity by the association shall be distributed to the State and to member organizations in proportion to their contributions to the fund pursuant to sections 6 and 9 of this act. f. Moneys that are available or become available from the insolvent organization shall be used to make pro rata refunds to member organizations and the State, as appropriate, for the contractual obligations of the insolvent organizations paid by the association pursuant to this act, in accordance with and subject to the provisions of the "Life and Health Insurers Rehabilitation and Liquidation Act," P.L.1992, c.65 (C.17B:32-31 et seq.). L.2000,c.12,s.10.
N.J. Stat. § 17B:32B-11 Additional powers, duties of the commissioner.
11. a. In addition to the duties and powers enumerated elsewhere in this act, the commissioner shall, upon request of the board of directors, provide the association with a statement of the net written premiums received in this State and any other appropriate states for each member organization. b. The commissioner may suspend or revoke, after notice and hearing, the certificate of authority to transact business in this State of any member organization which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the commissioner may levy a penalty on any member organization which fails to pay an assessment when due. That penalty shall not exceed five percent of the unpaid assessment per month, but no penalty shall be less than $100 per month. c. Any action of the board of directors or the association may be appealed to the commissioner by a member organization if that appeal is taken within 30 days from the final action being appealed. If a member organization is appealing an assessment, the amount assessed shall be paid to the association and made available to meet association obligations during the pendency of an appeal. If the appeal of an assessment is successful, the amount paid in error or excess shall be returned to the member organization. Any determination of an appeal from an action of the board of directors shall be subject to review by the commissioner on the record below, and shall not be considered a contested case under the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). The commissioner's determination shall be a final agency decision subject to review by the Appellate Division of the Superior Court. L.2000,c.12,s.11.
N.J. Stat. § 17B:32B-12 Tax credit permitted for member organizations.
12. a. A member organization shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to 50 % of an assessment for which a certificate of contribution has been issued pursuant to subsection i. of section 9 of this act. One-fifth of that credit amount may be applied against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for each of the five privilege periods beginning on or after the third calendar year commencing after the assessment was paid, provided however, that no member organization may reduce that tax liability pursuant to this section by more than 20% of the amount (determined without regard to any other credits allowed pursuant to law) otherwise due for a privilege period. If a member organization should cease doing business in this State, any credit amounts not yet applied against its liability may be applied against its liability for tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for the privilege period that it ceases to do business in this State. b. Any sums that are acquired by a member organization as the result of a refund from the association pursuant to subsection g. of section 9 of this act are deemed to be assessment amounts for which a credit was allowed pursuant to subsection a. of this section. If the member organization has applied any amounts of the credit allowed pursuant to subsection a. of this section, then 50% of the amount of any refund shall be paid by the member organization to the State as the Director of the Division of Taxation in the Department of the Treasury may require until the amounts paid equal the amounts applied as credit. The association shall notify the commissioner and the director of any refunds made. L.2000,c.12,s.12.
N.J. Stat. § 17B:32B-13 Examination, regulation.
13. a. The association shall be subject to examination and regulation by the commissioner. The board of directors shall submit to the commissioner each year, not later than 120 days after the close of the association's fiscal year, a financial report in a form approved by the commissioner and a report of its activities during the preceding fiscal year. b. The commissioner shall report annually to the Chairman and the Ranking Minority member of the Assembly Appropriations Committee and the Chairman and the Ranking Minority member of the Senate Budget and Appropriations Committee regarding the administration of the fund, including the status of pending litigation, the amount of claims made and the amount of any distributions on those claims, as well as the effects of the assessments under this act on the operations of member organizations. L.2000,c.12,s.13.
N.J. Stat. § 17B:32B-14 Exemption of association from certain fees, taxes.
14. The association shall be exempt from the payment of all fees and all taxes levied by this State or any of its subdivisions, except those levied on real property. L.2000,c.12,s.14.
N.J. Stat. § 17B:32B-15 Condition for receipt by providers of payments.
15. As a condition of receiving payment directly from the association for an eligible claim against an insolvent organization, a provider shall agree to forgive that organization of one-third of the unpaid contractual obligation incurred prior to insolvency, which would otherwise be paid by the organization had it not been insolvent. The foregoing shall not apply to any portion of an eligible claim owed to a provider by another insurer, health maintenance organization, or other payer through a coordination of benefits provision. The association is not bound by an assignment of benefits executed with respect to the coverage provided by the insolvent organization. The association may aggregate all eligible claims owed providers when negotiating direct payment of eligible claims of all covered individuals. Nothing in this act shall be construed to preclude any provider from collecting moneys owing to the provider from a self-insured benefit plan that contracted with an insolvent organization to pay claims on an administrative services only basis. L.2000,c.12,s.15.
N.J. Stat. § 17B:32B-16 Immunity from liability for member organizations, etc.
16. There shall be no liability on the part of, and no cause of action of any nature shall arise against, any member organization or its agents or employees, the association or its agents or employees, or the commissioner or his representatives, for any action or omission by them in the performance of their powers and duties under this act. L.2000,c.12,s.16.
N.J. Stat. § 17B:32B-17 Rules, regulations.
18. The commissioner shall promulgate such rules and regulations as may be necessary to effectuate the purposes of this act. L.2000,c.12,s.18.
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