N.J. Stat. tit. 17, ch. 48H

in effect

N.J. Stat. § 17:48H-1 Definitions relative to organized delivery systems for health care services benefits.

1. As used in this act: "Affiliate" means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the organized delivery system. "Capitation" means a fixed per member, per month, payment or percentage of premium payment for which the provider assumes the risk for the cost of contracted services without regard to the type, value or frequency of the services provided. "Carrier" means an insurer authorized to transact the business of health insurance as defined at N.J.S.17B:17-4, a hospital service corporation authorized to transact business in accordance with P.L.1938, c.366 (C.17:48-1 et seq.), a medical service corporation authorized to transact business in accordance with P.L.1940, c.74 (C.17:48A-1 et seq.), a health service corporation authorized to transact business in accordance with P.L.1985, c.236 (C.17:48E-1 et seq.) or a health maintenance organization authorized to transact business pursuant to P.L.1973, c.337 (C.26:2J-1 et seq.). "Certified organized delivery system" means an organized delivery system that is compensated on a basis which does not entail the assumption of financial risk by the organized delivery system and that is certified in accordance with this act. "Comprehensive health care services" means the basic benefits provided under a health benefits plan, including medical and surgical services provided by licensed health care providers who may include, but are not limited to, family physicians, internists, cardiologists, psychiatrists, rheumatologists, dermatologists, orthopedists, obstetricians, gynecologists, neurologists, endocrinologists, radiologists, nephrologists, emergency services physicians, ophthalmologists, pediatricians, pathologists, general surgeons, osteopathic physicians, physical therapists and chiropractors. Basic benefits may also include inpatient or outpatient services rendered at a licensed hospital, covered services performed at an ambulatory surgical facility and ambulance services. "Financial risk" means exposure to financial loss that is attributable to the liability of an organized delivery system for the payment of claims or other losses arising from covered benefits for treatment or services other than those performed directly by the person or organized delivery system liable for payment, including a loss sharing arrangement. A payment method wherein a provider accepts reimbursement in the form of a capitation payment for which it undertakes to provide health care services on a prepayment basis shall not be considered financial risk. "Health benefits plan" means a hospital and medical expense insurance policy; health service corporation contract; hospital service corporation contract; medical service corporation contract; health maintenance organization subscriber contract; or other plan for medical care delivered or issued for delivery in this State. Health benefits plan shall not include one or more, or any combination of, the following: coverage only for accident, or disability income insurance, or any combination thereof; coverage issued as a supplement to liability insurance; liability insurance, including general liability insurance and automobile liability insurance; stop loss or excess risk insurance; workers' compensation or similar insurance; automobile medical payment insurance; credit-only insurance; coverage for on-site medical clinics; and other similar insurance coverage, as specified in federal regulations, under which benefits for medical care are secondary or incidental to other insurance benefits. Health benefits plans shall not include the following benefits if they are provided under a separate policy, certificate or contract of insurance or are otherwise not an integral part of the plan: limited scope dental or vision benefits; benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof; and such other similar, limited benefits as are specified in Federal regulations. Health benefits plan shall not include hospital confinement indemnity coverage if the benefits are provided under a separate policy, certificate or contract of insurance, there is no coordination between the provision of the benefits and any exclusion of benefits under any group health benefits plan maintained by the same plan sponsor, and those benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor. Health benefits plan shall not include the following if it is offered as a separate policy, certificate or contract of insurance: Medicare supplemental health insurance as defined under section 1882(g)(1) of the Federal Social Security Act (42 U.S.C. s.1395ss(g)(1)); and coverage supplemental to the coverage provided under chapter 55 of Title 10, United States Code (10 U.S.C. s.1071 et seq.); and similar supplemental coverage provided to coverage under a group health plan. "Licensed organized delivery system" means an organized delivery system that is compensated on a basis which entails the assumption of financial risk by the organized delivery system and that is licensed in accordance with this act. "Limited health care services" means a health service or benefit which a carrier has elected to subcontract for as a separate service, which may include, but shall not be limited to, substance use disorder services, vision care services, mental health services, podiatric care services, chiropractic services, pharmaceutical services or rehabilitation services. Limited health care services shall not include case management services or employee assistance plan services. "Organized delivery system" or "system" means an organization with defined governance that: a. is organized for the purpose of and has the capability of contracting with a carrier to provide, or arrange to provide, under its own management substantially all or a substantial portion of the comprehensive health care services or benefits under the carrier's benefits plan on behalf of the carrier, which may or may not include the payment of hospital and ancillary benefits; or b. is organized for the purpose of acting on behalf of a carrier to provide, or arrange to provide, limited health care services that the carrier elects to subcontract for as a separate category of benefits and services apart from its delivery of benefits under its comprehensive benefits plan, which limited services are provided on a separate contractual basis and under different terms and conditions than those governing the delivery of benefits and services under the carrier's comprehensive benefits plan. An organized delivery system shall not include an entity otherwise authorized or licensed in this State to provide comprehensive or limited health care services on a prepayment or other basis in connection with a health benefits plan or a carrier. "Provider" means a physician, health care professional, health care facility, or any other person who is licensed or otherwise authorized to provide health care services or other benefits in the state or jurisdiction in which they are furnished. L.1999, c.409, s.1; amended 2017, c.383, s.1.

N.J. Stat. § 17:48H-2 Certification, licensure, required

2. a. Beginning one year after the enactment of this act, no person, corporation, partnership, or other entity shall operate an organized delivery system in this State without obtaining certification or licensure pursuant to this act. b. Any person, corporation, partnership, or other entity offering health care services to a carrier in a manner substantially provided for in this act shall be subject to the provisions of this act unless the entity is otherwise regulated under P.L.1973, c. 337 (C.26:2J-1 et seq.), Title 17 of the Revised Statutes, Title 17B of the New Jersey Statutes or P.L.1970, c.102 (C.18A:64G-1 et seq.). L.1999,c.409,s.2.

N.J. Stat. § 17:48H-3 Application for certification.

3. a. An organized delivery system which is not subject to licensure requirements pursuant to this act shall submit an application for certification to the Commissioner of Banking and Insurance. The organized delivery system may continue to operate during the pendency of its application, but in no case longer than 12 months after the date of submission of the application to the Department of Banking and Insurance, unless the commissioner, by regulation, extends the 12-month limitation. In the event the application is denied, the applicant shall be treated as an organized delivery system whose certification has been revoked pursuant to sections 7 and 8 of this act. Notwithstanding the obligations imposed by this act regarding certification requirements, nothing in this subsection shall operate to impair any contract in force on the effective date of this act, but this act shall apply to any contract renewed on or after the effective date of this act. b. The certification shall be valid for a period of three years. c. A certified organized delivery system shall not directly issue health benefits plans. L.1999, c.409, s.3; amended 2012, c.17, s.39.

N.J. Stat. § 17:48H-4 Form, contents of application.

4. Application for certification to operate an organized delivery system shall be made to the Commissioner of Banking and Insurance on a form prescribed by the commissioner, shall be certified by an officer or authorized representative of the applicant and shall include the following: a. A copy of the applicant's basic organizational documents. For purposes of this subsection, "basic organizational documents" means the articles of incorporation, articles of association, partnership agreement, management agreement, trust agreement, or other applicable documents as appropriate to the applicant's form of business entity, and all amendments to those documents; b. A copy of the executed bylaws, rules, and regulations, or similar documents, regulating the conduct of the applicant's internal affairs; c. A list, in a form approved by the Commissioner of Banking and Insurance, of the names, addresses, and official positions of the persons who are to be responsible for the conduct of the affairs of the applicant, including, but not limited to, the members of the board of directors, executive committee, or other governing board or committee, the principal officers, and any person or entity owning or having the right to acquire 10% or more of the voting securities of the applicant; in the case of a partnership or association, the names of the partners or members; and a statement of any criminal convictions or civil, enforcement, or regulatory action, including actions relating to professional licenses, taken against any person who is a member of the board, the executive committee, or other governing board or committee, the principal officers, or the persons who are responsible for the conduct of the affairs of the applicant; d. A statement generally describing the applicant, its facilities, personnel, and the health care services to be offered by the organized delivery system; e. A copy of the standard form of any provider agreement made or to be made between the applicant and any providers relative to the provision of health care services; f. A copy of the form of any contract made or to be made between the applicant and any carrier for the provision of or arrangement to provide health care services, which contract shall contain provisions establishing the respective duties of the carrier and the applicant with respect to compliance with P.L.1997, c.192 (C.26:2S-1 et seq.); g. With respect to each contract made or to be made between the applicant and any other person who will provide comprehensive or limited health care services: (1) A list of the persons who are to provide the health care services, and the geographical area in which they are located and in which the services are to be performed; (2) A list of any affiliate of the applicant which provides services to the applicant in this State and a description of any material transaction between the affiliate and the applicant; (3) A description of the health care services or benefits to be offered or proposed to be offered by the applicant; (4) A description of the means which will be utilized to assure the availability and accessibility of the health care services to enrollees or contract holders; and (5) A description of the means by which the organized delivery system shall be compensated for each contract entered into with a carrier; and h. A list of all administrative, civil, or criminal actions and proceedings to which the applicant, or any of its affiliates, or persons who are responsible for the conduct of the affairs of the applicant or affiliate, have been subject and the resolution of those actions and proceedings. If a license, certificate, or other authority to operate has been refused, suspended, or revoked by any jurisdiction, the applicant shall provide a copy of any orders, proceedings, and determinations relating thereto. In addition to the information required pursuant to this section, the Commissioner of Banking and Insurance may establish additional reporting requirements or make detailed reporting requirements for any class of certified organized delivery system. L.1999, c.409, s.4; amended 2012, c.17, s.40.

N.J. Stat. § 17:48H-5 Review of application.

5. Following receipt of an application for certification, the Commissioner of Banking and Insurance shall review it and notify the applicant of any deficiencies contained therein. a. The Commissioner of Banking and Insurance shall issue a certification to an organized delivery system if the commissioner finds that the system meets the standards provided for in this act, including, but not limited to: (1) All of the material required by section 4 of this act has been filed; (2) The persons responsible for conducting the applicant's affairs are competent, trustworthy, and possess good reputations, and have had appropriate experience, training, and education; (3) The persons who are to perform the health care services are properly qualified; (4) The organized delivery system has demonstrated the ability to assure that health care services will be provided in a manner which will assure the availability and accessibility of the services; (5) The standard forms of provider agreements to be used by the organized delivery system are acceptable; and (6) The organized delivery system's contracts to provide services do not entail or will not result in the assumption of financial risk by the system. b. The commissioner may deny an application for certification if the applicant fails to meet any of the standards provided in this act or on any other reasonable grounds. If certification is denied, the commissioner shall notify the applicant and shall set forth the reasons for the denial in writing. The applicant may request a hearing by notice to the commissioner within 30 days of receiving the notice of denial. Upon such denial, the applicant shall submit to the commissioner a plan for bringing the organized delivery system into compliance or providing for the closing down of its business. L.1999, c.409, s.5; amended 2012, c.17, s.41.

N.J. Stat. § 17:48H-6 Notice of change, modification.

6. a. A certified organized delivery system, unless otherwise provided for in this act, shall not materially modify any matter or document furnished to the Commissioner of Banking and Insurance pursuant to section 4 of this act unless the organized delivery system files with the commissioner, at least 60 days prior to use or adoption of the change, a notice of the change or modification, together with that information required by the commissioner to explain the change or modification. If the commissioner fails to affirmatively approve or disapprove the change or modification within 60 days of submission of the notice, the notice of modification shall be deemed approved. The commissioner may extend the 60-day review period for not more than 30 additional days by giving written notice of the extension before the expiration of the 60-day period. If a change or modification is disapproved, the commissioner shall notify the system in writing and specify the reason for the disapproval. b. Prior to entering into any contract with a carrier, a certified organized delivery system shall file with the commissioner, for the commissioner's approval, a copy of that contract. The filing shall be made no later than 60 days prior to the date that the contract is intended to be in effect. If the contract is not disapproved prior to the effective date by the commissioner, the contract shall be deemed approved. L.1999, c.409, s.6; amended 2012, c.17, s.42.

N.J. Stat. § 17:48H-7 Suspension, revocation of certification, grounds.

7. The Commissioner of Banking and Insurance may suspend or revoke a certification issued to an organized delivery system pursuant to this act upon the commissioner's determination that: a. The certified organized delivery system is operating in contravention of its basic organizational documents; b. The certified organized delivery system is unable to fulfill its obligations to the carriers with whom it contracts; c. The continued operation of the certified organized delivery system would be hazardous to the health and welfare of the enrollees or contract holders to whom it is obligated to provide health care services or detrimental to a carrier with whom it has contracted to provide the services; d. The certified organized delivery system is unable to maintain the standards as set forth by the commissioner by regulation; e. The certified organized delivery system has failed, as provided by the contract, to comply with the provisions of P.L.1997, c.192 (C.26:2S-1 et seq.); f. The certified organized delivery system has failed to provide the health care services for which it has been certified or has provided health care services which are in contravention of the contract or contracts filed with the commissioner; g. The certified organized delivery system has otherwise failed to comply with this act or with other applicable law; or h. There are other reasonable grounds that warrant suspension or revocation. L.1999, c.409, s.7; amended 2012, c.17, s.43.

N.J. Stat. § 17:48H-8 Notification of grounds for suspension, revocation of certification.

8. a. If the Commissioner of Banking and Insurance has cause to believe that grounds exist for the suspension or revocation of the certification issued to an organized delivery system, the commissioner shall notify the system, in writing, specifically stating the grounds for suspension or revocation and fixing a time for a hearing in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). If the certification is revoked, the organized delivery system shall submit a plan to the commissioner within 15 days of the revocation, for the winding up of its affairs, and shall conduct no further business except as may be essential to the orderly conclusion of its business. The commissioner may, by written order, permit such further operation of the organized delivery system as the commissioner finds to be in the best interest of individuals receiving health care services from the system. b. The commissioner shall notify all carriers with contracts with the system that are on file with the Department of Banking and Insurance of the proceedings. L.1999, c.409, s.8; amended 2012, c.17, s.44.

N.J. Stat. § 17:48H-9 Fees.

9. A certified organized delivery system shall pay to the Commissioner of Banking and Insurance those application and examination fees as are established by the commissioner by regulation. L.1999, c.409, s.9; amended 2012, c.17, s.45.

N.J. Stat. § 17:48H-10 Civil administrative penalty.

10. The Commissioner of Banking and Insurance may, upon notice and hearing, assess a civil administrative penalty in an amount not less than $250 nor more than $10,000 for each day that a certified organized delivery system is in violation of this act. Penalties imposed by the commissioner pursuant to this section may be in lieu of, or in addition to, suspension or revocation of a certification pursuant to this act. A penalty may be recovered in a summary proceeding pursuant to "The Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). L.1999, c.409, s.10; amended 2012, c.17, s.46.

N.J. Stat. § 17:48H-11 Application for licensure.

11. a. An organized delivery system which receives compensation on a basis that entails the assumption of financial risk shall submit an application for licensure to the Commissioner of Banking and Insurance. The organized delivery system may continue to operate during the pendency of its application, but in no case longer than 12 months after the date of submission of the application to the Department of Banking and Insurance, unless the commissioner, by regulation, extends the 12-month limitation. In the event the application is denied, the applicant shall be treated as an organized delivery system whose license has been revoked pursuant to sections 23 and 24 of this act. Notwithstanding the obligations imposed by this act regarding licensure requirements, nothing in this subsection shall operate to impair any contract in force on the effective date of this act, but this act shall apply to any contract renewed on or after the effective date of this act. b. An organized delivery system which receives compensation on a basis that entails the assumption of financial risk, but meets the criteria set forth in this subsection, may apply to the commissioner for an exemption from the licensure requirements of this act based on the system's current contractual arrangements. The commissioner may grant the exemption for such period of time that the commissioner determines that the financial risk of the organized delivery system is de minimis because the organized delivery system's exposure to financial loss is limited in amount or likelihood to the degree that it reasonably will not prevent the system from satisfying the liabilities imposed under the terms of its contracts. The commissioner may revoke the organized delivery system's exemption from licensure, after notice and an opportunity to be heard, if the commissioner determines that the system's contracts no longer meet the requirements for exemption set forth in this subsection. Upon revocation of the exemption, the system shall be required to obtain licensure from the department within 90 days. c. An organized delivery system that is granted an exemption from licensure shall apply to and obtain certification as an organized delivery system from the Department of Banking and Insurance pursuant to the provisions of this act. d. A licensed organized delivery system shall not directly issue health benefits plans. L.1999, c.409, s.11; amended 2012, c.17, s.47.

N.J. Stat. § 17:48H-12 Form, contents of application.

12. Application for a license to operate an organized delivery system shall be made to the Commissioner of Banking and Insurance on a form prescribed by the commissioner, shall be certified by an officer or authorized representative of the applicant, and shall include the following: a. A copy of the applicant's basic organizational documents. For purposes of this subsection, "basic organizational documents" means the articles of incorporation, articles of association, partnership agreement, management agreement, trust agreement, or other applicable documents as appropriate to the applicant's form of business entity and all amendments to those documents; b. A copy of the executed bylaws, rules, and regulations, or similar documents, regulating the conduct of the applicant's internal affairs; c. A list, in a form approved by the Commissioner of Banking and Insurance, of the names, addresses, and official positions of the persons who are to be responsible for the conduct of the affairs of the applicant, including, but not limited to, the members of the board of directors, executive committee or other governing board or committee, the principal officers, and any person or entity owning or having the right to acquire 10% or more of the voting securities of the applicant; in the case of a partnership or association, the names of the partners or members; each person who has loaned funds to the applicant for the operation of its business; and a statement of any criminal convictions or civil, enforcement or regulatory action, including actions relating to professional licenses, taken against any person who is a member of the board, the executive committee or other governing board or committee, or the principal officers, or the persons who are responsible for the conduct of the affairs of the applicant; d. A statement generally describing the applicant, its facilities, personnel, and the health care services to be offered by the organized delivery system; e. A copy of the standard form of any provider agreement made or to be made between the applicant and any providers relative to the provision of health care services; f. A copy of the form of any contract made or to be made between the applicant and any carrier for the provision of or arrangement to provide health care services, which contract shall contain provisions establishing the respective duties of the carrier and the applicant with respect to compliance with P.L.1997, c.192 (C.26:2S-1 et seq.); g. A copy of the applicant's most recent financial statements audited by an independent certified public accountant. If the financial affairs of the applicant's parent company are audited by an independent certified public accountant, but those of the applicant are not, then a copy of the most recent audited financial statement of the applicant's parent company, audited by an independent certified public accountant, shall be submitted. A consolidated financial statement of the applicant and its parent company shall satisfy this requirement unless the Commissioner of Banking and Insurance determines that additional or more recent financial information is required for the proper administration of this act; h. A copy of the applicant's financial plan, including a three-year projection of anticipated operating results, a statement of the sources of working capital and any other sources of funding and provisions for contingencies; i. With respect to each contract made or to be made between the applicant and any other person who will provide comprehensive or limited health care services: (1) A list of the persons who are to provide the health care services, and the geographical area in which they are located and in which the services are to be performed; (2) A list of any affiliate of the applicant which provides services to the applicant in this State and a description of any material transaction between the affiliate and the applicant; (3) A description of the health care services or benefits to be offered or proposed to be offered; (4) A description of the means which will be utilized to assure the availability and accessibility of the health care services to enrollees or contract holders; (5) A plan, in the event of the insolvency of the organized delivery system, for continuation of the health care services to be provided for under the contract; and (6) A description of the means by which the organized delivery system shall be compensated for each contract entered into with a carrier; j. A power of attorney, duly executed by the applicant, if not domiciled in this State, appointing the Commissioner of Banking and Insurance and the commissioner's successors in office as the true and lawful attorney of the applicant in and for this State upon whom all lawful process in any legal action or proceeding against the organized delivery system in a cause of action arising in this State may be served; k. A list of all administrative, civil, or criminal actions and proceedings to which the applicant, or any of its affiliates, or persons who are responsible for the conduct of the affairs of the applicant or affiliate, have been subject and the resolution of those actions and proceedings. If a license, certificate or other authority to operate has been refused, suspended, or revoked by any jurisdiction, the applicant shall provide a copy of any orders, proceedings and determinations relating thereto; and l. Other information as may be required by the Commissioner of Banking and Insurance. L.1999, c.409, s.12; amended 2012, c.17, s.48.

N.J. Stat. § 17:48H-13 Review of application.

13. Following receipt of an application for licensure, the Commissioner of Banking and Insurance shall review it and notify the applicant of any deficiencies contained therein. a. The Commissioner of Banking and Insurance shall issue a license to an organized delivery system if the commissioner finds that the system meets the standards provided for in this act, including, but not limited to: (1) All of the material required by section 12 of this act has been filed; (2) The persons responsible for conducting the applicant's affairs are competent, trustworthy, and possess good reputations, and have had appropriate experience, training, and education; (3) The persons who are to perform the health care services are properly qualified; (4) The organized delivery system has demonstrated the ability to assure that health care services will be provided in a manner which will assure the availability and accessibility of the services; (5) The standard forms of provider agreements to be used by the organized delivery system are acceptable; (6) The applicant is financially sound and may reasonably be expected to meet its obligations to enrollees, contract holders and carriers. In making this determination, the commissioner shall consider: (a) The financial soundness of the applicant's compensation arrangements for the provision of health care services; (b) The adequacy of working capital, other sources of funding and provisions for contingencies; and (c) Whether any deposit of cash or securities, or any other evidence of financial protection submitted, meets the requirements set forth in this act or by the commissioner by regulation; (7) Any deficiencies identified by the commissioner have been corrected; and (8) Any other factors determined by the commissioner to be relevant have been addressed to the satisfaction of the commissioner. b. (Deleted by amendment, P.L.2012, c.17). c. The Commissioner of Banking and Insurance, may deny an application for a license if the applicant fails to meet any of the standards provided in this act or on any other reasonable grounds. If the license is denied, the Commissioner of Banking and Insurance shall notify the applicant and shall set forth the reasons for the denial in writing. The applicant may request a hearing by notice to the commissioner within 30 days of receiving the notice of denial. Upon such denial, the applicant shall submit to the commissioner a plan for bringing the organized delivery system into compliance or providing for the closing down of its business. L.1999, c.409, s.13; amended 2012, c.17, s.49.

N.J. Stat. § 17:48H-14 Notice of change, modification

14. a. A licensed organized delivery system, unless otherwise provided in this act, shall not materially modify any matter or document furnished pursuant to section 12 of this act, unless the system files with the Commissioner of Banking and Insurance, at least 60 days prior to use or adoption of the change, a notice of the change or modification, together with that information required by the commissioner to explain the change or modification. If the commissioner fails to affirmatively approve or disapprove the change or modification within 60 days of submission of the notice, the notice of modification shall be deemed approved. The commissioner may extend the 60-day review period for not more than 30 additional days by giving written notice of the extension before the expiration of the 60-day period. If a change or modification is disapproved, the commissioner shall notify the system in writing and specify the reason for the disapproval. b. Prior to entering into any contract with a carrier, a licensed organized delivery system shall file with the commissioner, for the commissioner's approval, a copy of the contract. The filing shall be made no later than 60 days prior to the date that the contract is intended to be in effect. The commissioner shall either approve the contract or state in writing the commissioner's reasons for disapproval within 60 days of receipt of the filing. L.1999,c.409,s.14.

N.J. Stat. § 17:48H-15 Services provided by licensed organized delivery system.

15. A licensed organized delivery system may: a. Contract with an insurer licensed in this State for the provision of indemnity coverage against the cost of services provided by the system or other obligations of the system, either on an individual or aggregate attachment basis; and b. In addition to comprehensive or limited services, as applicable, provided by the system for enrollees or contract holders, provide: (1) Additional services as approved by the Commissioner of Banking and Insurance; (2) Indemnity benefits covering urgent care or emergency services; (3) Coverage for services from providers, other than participating providers, in accordance with the terms of the contract; and (4) Any other function provided by law, in the system's organizational documents or in the license. L.1999, c.409, s.15; amended 2012, c.17, s.50.

N.J. Stat. § 17:48H-16 Treatment of organized delivery system as domestic insurer

16. a. A licensed organized delivery system which is organized under the laws of this State shall be treated as a domestic insurer for the purposes of P.L.1970, c.22 (C.17:27A-1 et seq.) and P.L.1992, c.65 (C.17B:32-31 et seq.). b. A licensed organized delivery system shall be subject to the provisions of chapter 30 of Title 17B of the New Jersey Statutes. c. The capital, surplus and other funds of a licensed organized delivery system shall be invested in accordance with the provisions of chapter 20 of Title 17B of the New Jersey Statutes and guidelines established by the Commissioner of Banking and Insurance by regulation. L.1999,c.409,s.16.

N.J. Stat. § 17:48H-17 Examination of licensed organized delivery system

17. The Commissioner of Banking and Insurance may conduct an examination of a licensed organized delivery system as often as the commissioner deems necessary in order to protect the interests of providers, contract holders, enrollees, and the residents of this State. A licensed organized delivery system shall make its relevant books and records available for examination by the commissioner, and retain its records in accordance with a schedule established by the commissioner by regulation. The reasonable expenses of the examination shall be borne by the licensed organized delivery system being examined. In lieu of such examination, the commissioner may accept the report of an examination made by the commissioner of another state. L.1999,c.409,s.17.

N.J. Stat. § 17:48H-18 Contracts with providers, mandatory terms

18. All licensed organized delivery system contracts with providers shall contain the following terms and conditions: a. In the event that the organized delivery system fails to pay or provide for comprehensive or limited health care services for any reason whatsoever, including, but not limited to, insolvency or breach of contract, neither the contract holder nor the covered person shall be liable to the provider for any sums owed to the provider under the contract. b. No provider, or agent, trustee or assignee thereof may maintain an action at law or attempt to collect from the contract holder or covered person sums owed to the provider by the licensed organized delivery system, except that this subsection shall not be construed to prohibit collection of uncovered charges consented to or lawfully owed to providers by a contract holder or covered person. L.1999,c.409,s.18.

N.J. Stat. § 17:48H-19 Minimum net worth

19. a. A licensed organized delivery system shall, at all times, have and maintain a minimum net worth, determined on a statutory accounting basis, in an amount established by the Commissioner of Banking and Insurance by regulation, which amount may vary in accordance with the size of the system, the services provided by the system, and the financial liabilities of the system. b. With respect to any amounts that may be required by the commissioner pursuant to subsection a. of this section, the commissioner shall take into account any limitation on the organized delivery system's exposure to financial loss that results from a contract with a carrier that provides that any liabilities of the system may be satisfied by means of reductions or offsets against monies due to the system from the carrier, which reductions or offsets will not adversely affect the system's ability to meet its contractual obligations. L.1999,c.409,s.19.

N.J. Stat. § 17:48H-20 Deposit of cash, securities

20. a. A licensed organized delivery system shall deposit with the Commissioner of Banking and Insurance, 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, by regulation, which amount shall be adjusted annually by the commissioner in accordance with changes in the Consumer Price Index. The deposit shall be deemed an admitted asset of the system in the determination of net worth. b. All income from deposits shall be an asset of the licensed organized delivery system. A licensed organized delivery system may withdraw a deposit or any part thereof after making a substitute deposit of equal amount and value, except that a security may not be substituted unless it has been approved by the commissioner. c. If a licensed organized delivery system is placed in rehabilitation or liquidation, the deposit shall be treated as an asset subject to the provisions of P.L.1992, c.65 (C.17B:32-31 et seq.). L.1999,c.409,s.20.

N.J. Stat. § 17:48H-21 Maintenance of fidelity bond

21. A licensed organized delivery system shall maintain in force a fidelity bond in its own name on its officers and employees, in an amount established by the Commissioner of Banking and Insurance by regulation. L.1999,c.409,s.21.

N.J. Stat. § 17:48H-22 Annual report

22. A licensed organized delivery system shall file an annual report with the Commissioner of Banking and Insurance, on or before March 1 of each year, attested to by at least two principal officers, which covers the preceding calendar year. The report shall be on a form prescribed by the commissioner and shall include: a. A financial statement of the licensed organized delivery system, including its balance sheet, income statement and statement of changes in financial position for the preceding year, certified by an independent public accountant, or a consolidated audited financial statement of its parent company certified by an independent certified public accountant, attached to which shall be consolidating financial statements of the system; b. At the discretion of the commissioner, a statement by a qualified actuary setting forth the actuary's opinion as to the adequacy of reserves; and c. Any other information relating to the performance of the licensed organized delivery system as may be required by the commissioner. The commissioner may assess a civil administrative penalty of up to $100 per day for each day a required report is late. The commissioner may require the submission of additional reports from time to time, as the commissioner deems necessary. A penalty may be recovered in a summary proceeding pursuant to "The Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). L.1999,c.409,s.22.

N.J. Stat. § 17:48H-22.1 Definitions.

41. As used in sections 41 through 45 of P.L.2014, c.81 (C.17:48H-22.1 through C.17:48H-22.5): "Commissioner" means the Commissioner of Banking and Insurance. "Licensed organized delivery system" means an entity authorized to transact business in this State as a licensed organized delivery system pursuant to P.L.1999, c.409 (C.17:48H-1 et seq.). L.2014, c.81, s.41.

N.J. Stat. § 17:48H-22.2 Increase in amount of capital or surplus required of licensed organized delivery system.

42. The commissioner may increase the amount of capital or surplus required of a licensed organized delivery system, or subsequently revise or redetermine that increase, using appropriate methods and procedures established by rules and regulations adopted by the commissioner, in order to provide adequate protection against risks affecting the licensed organized delivery system's financial condition that are not adequately or fully covered by its reserves or other assets, but under no circumstances shall a licensed organized delivery system's capital or surplus be less than the capital or surplus required pursuant to regulation as prescribed by the commissioner; provided, however, that any increase required by a subsequent revision or redetermination pursuant to this section shall be made only after a departmental hearing, unless that hearing is waived by the affected licensed organized delivery system. All matters pertaining to a hearing or to an increase in capital or surplus pursuant to this section shall be confidential and not subject to subpoena or public inspection, except to the extent that the commissioner finds release of that information necessary to protect the public. The hearing shall be initiated within 20 days after written notice to the licensed organized delivery system. Any declaration regarding an increase required by a subsequent revision or redetermination shall contain findings specifying the factors deemed significant in regard to the particular licensed organized delivery system, and shall set forth the reasons supporting the increase of capital or surplus ordered by the commissioner. In determining any increase, revision or redetermination in the amount of capital or surplus, the commissioner shall consider the risks of: a. Increases or decreases in the frequency and severity of losses under normal operating conditions, as well as increases or decreases in those values, above or below the levels contemplated by the rates that the licensed organized delivery system charged for coverage and above or below those reasonably expected under normal conditions; b. Increases or decreases in expenses under normal operating conditions, as well as increases or decreases in those values, above or below the levels contemplated by the rates the licensed organized delivery system charged for coverage and above or below those reasonably expected under normal conditions; c. Increases or decreases in the value of, or return on, invested assets under normal operating conditions, as well as increases or decreases in those values, above or below those levels anticipated under normal conditions; d. Changes in economic, social or market conditions that could adversely or favorably affect the financial condition of the licensed organized delivery system, including conditions that would make liquidity more or less important than contemplated and would prevent or facilitate timely investments or force or prohibit untimely sales of assets; and e. Any other contingencies, including reinsurance and unfunded or extra contractual obligations, which may affect the licensed organized delivery system's financial condition. L.2014, c.81, s.42.

N.J. Stat. § 17:48H-22.3 Determination of increase, revision or redetermination; factors.

43. In determining any increase, revision or redetermination in the capital or surplus of a licensed organized delivery system pursuant to the provisions of section 42 of P.L.2014, c.81 (C.17:48H-22.2) the commissioner shall take into account the following factors: a. Methods and techniques used to measure risk exposure and variability; b. The information available relating to the magnitude of the various risks described in section 42 of P.L.2014, c.81 (C.17:48H-22.2); c. The extent to which risks described in section 42 of P.L.2014, c.81 (C.17:48H-22.2) are independent or interrelated, and whether any dependency is direct or inverse; d. The extent to which the licensed organized delivery system has provided protection against contingencies in ways other than the establishment of surplus, including, but not limited to: redundancy of premiums; margin in reserves and liabilities; adjustability of contracts pursuant to the terms of the contracts; voluntary or mandatory investment valuation reserves; reinsurance; the use of conservative actuarial assumptions to provide a margin of security; reserve adjustments after rate increases for policies written at earlier and less adequate rates; contingency or catastrophe reserves; and diversification of assets and underwriting risk; and e. Any other relevant factors, including the National Association of Insurance Commissioners' reports and independent judgments of the soundness of the licensed organized delivery system's financial condition, as evidenced by the rating and reports of reliable professional financial services. L.2014, c.81, s.43.

N.J. Stat. § 17:48H-22.4 Suspension, revocation of authority to do business.

44. The commissioner may suspend or revoke the authority to do business in this State of any licensed organized delivery system that does not comply with the provisions of sections 41 through 45 of P.L.2014, c.81 (C.17:48H-22.1 through C.17:48H-22.5). L.2014, c.81, s.44.

N.J. Stat. § 17:48H-22.5 Rules, regulations.

45. The commissioner may promulgate regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) necessary to effectuate the purposes of sections 41 through 45 of P.L.2014, c.81 (C.17:48H-22.1 through C.17:48H-22.5). Such rules and regulations shall be consistent with the standards for risk based capital for health organizations adopted by the National Association of Insurance Commissioners. L.2014, c.81, s.45.

N.J. Stat. § 17:48H-23 Suspension, revocation of license, grounds

23. The Commissioner of Banking and Insurance may suspend or revoke the license issued to an organized delivery system pursuant to this act upon the commissioner's determination that: a. The licensed organized delivery system is operating in contravention of its basic organizational documents; b. The licensed organized delivery system is unable to fulfill its obligations to the carriers with whom it contracts; c. The net worth of the licensed organized delivery system is less than that required by this act, or the licensed organized delivery system has failed to correct any deficiency in its net worth as required by the commissioner; d. The continued operation of the licensed organized delivery system would be hazardous to the health and welfare of the enrollees or contract holders with whom it has contracted to provide health care services or detrimental to a carrier with whom it has contracted to provide the services; e. The licensed organized delivery system has failed to file any report required pursuant to this act; f. The licensed organized delivery system has failed to provide the health care services for which it has been licensed or has provided health care services which are in contravention of the contract or contracts filed with the commissioner; g. The licensed organized delivery system is unable to maintain the standards set forth by regulation; h. The licensed organized delivery system has failed, as provided by the contract, to comply with the provisions of P.L.1997, c.192 (C.26:2S-1 et seq.); i. The licensed organized delivery system has otherwise failed to comply with this act or with other applicable law; or j. There are other reasonable grounds that warrant suspension or revocation. L.1999,c.409,s.23.

N.J. Stat. § 17:48H-24 Notification of grounds for suspension, revocation of license

24. a. If the Commissioner of Banking and Insurance has cause to believe that grounds exist for the suspension or revocation of a license, the commissioner shall notify the licensed organized delivery system, in writing, specifically stating the grounds for suspension or revocation and fixing a time for a hearing in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). If a license is revoked, the licensed organized delivery system shall submit a plan to the commissioner within 15 days of the revocation, for the winding up of its affairs, and shall conduct no further business except as may be essential to the orderly conclusion of its business. The commissioner may, by written order, permit such further operation of the system as the commissioner finds to be in the best interest of individuals receiving health care services from the system. b. The commissioner shall notify all carriers with contracts with the system that are on file with the Department of Banking and Insurance of the proceedings. L.1999,c.409,s.24.

N.J. Stat. § 17:48H-25 Plan for insolvency, insurance

25. The Commissioner of Banking and Insurance may require, in connection with the plan for insolvency required pursuant to paragraph (5) of subsection i. of section 12 of this act, that a licensed organized delivery system maintain insurance to cover the expenses to be paid for continued benefits following a determination of insolvency, or make other arrangements to ensure that benefits are continued for the period determined in the insolvency plan. L.1999,c.409,s.25.

N.J. Stat. § 17:48H-26 Rehabilitation, liquidation, conservation of licensed organized delivery system

26. Any rehabilitation, liquidation or conservation of a licensed organized delivery system shall be subject to the provisions of P.L.1992, c.65 (C.17B:32-31 et seq.) and shall be conducted under the supervision of the Commissioner of Banking and Insurance; except that the commissioner shall have the authority to regulate any licensed organized delivery system doing business in this State as a domestic insurer. The commissioner may apply for an order directing the commissioner to rehabilitate, liquidate, reorganize or conserve a licensed organized delivery system upon any one or more applicable grounds as stated for insurers in P.L.1992, c.65 (C.17B:32-31 et seq.), or any other provisions of Title 17B of the New Jersey Statutes, or when, in the commissioner's opinion, the licensed organized delivery system fails to satisfy the requirements for the issuance of a license relating to solvency or the requirements for solvency protection as set forth in this act. L.1999,c.409,s.26.

N.J. Stat. § 17:48H-27 Licensed organized delivery system exempt from guaranty association act, C.17B:32A-1 et seq.

27. A licensed organized delivery system shall not be subject to the "New Jersey Life and Health Insurance Guaranty Association Act," P.L.1991, c.208 (C.17B:32A-1 et seq.), and the New Jersey Life and Health Insurance Guaranty Association established pursuant to that act shall not provide protection to any individuals entitled to receive health care services from a licensed organized delivery system. L.1999,c.409,s.27.

N.J. Stat. § 17:48H-28 Fees

28. A licensed organized delivery system shall pay to the Commissioner of Banking and Insurance those application and examination fees as are established by the commissioner by regulation in the same manner as established for insurers and health maintenance organizations licensed or authorized to do business in this State. L.1999,c.409,s.28.

N.J. Stat. § 17:48H-29 Civil administrative penalty

29. The Commissioner of Banking and Insurance may, upon notice and hearing, assess a civil administrative penalty in an amount not less than $250 nor more than $10,000 for each day that a licensed organized delivery system is in violation of this act. Penalties imposed by the commissioner pursuant to this section may be in lieu of, or in addition to, suspension or revocation of a license pursuant to this act. A penalty may be recovered in a summary proceeding pursuant to "The Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). L.1999,c.409,s.29.

N.J. Stat. § 17:48H-30 Confidentiality of data, information; exceptions

30. Any data or information relating to the diagnosis, treatment or health of an enrollee, prospective enrollee or contract holder obtained by a certified or licensed organized delivery system from the carrier, contract holder, enrollee, prospective enrollee or any provider shall be confidential and shall not be disclosed to any person except: a. To the extent that it may be necessary to carry out the purposes of this act; b. Upon the express consent of the enrollee, prospective enrollee or contract holder; c. Pursuant to statute or court order for the production of evidence or the discovery thereof; d. In the event of a claim or litigation between an enrollee, a prospective enrollee or a contract holder and the organized delivery system wherein that data or information is relevant. An organized delivery system shall be entitled to claim any statutory privilege against disclosure which the provider who furnished the information to the system is entitled to claim; e. For epidemiological and outcomes research when the identity of the enrollee, prospective enrollee or contract holder is protected through the use of anonymized information. For the purposes of this subsection, "anonymized information" means information that has been coded or encrypted to protect the identity of the enrollee, prospective enrollee or contract holder in such a manner that decoding or unencryption of the information can occur only with the use of a key that is available only to authorized persons and utilized only as deemed necessary by those persons, and the unauthorized use of which is subject to such penalties as are prescribed by law; or f. Upon the informed consent of the enrollee, prospective enrollee or contract holder, which is obtained for research that has been approved by an institutional review board, in accordance with federal requirements for informed consent under 21C.F.R.50 et seq. or 45C.F.R.46 et seq. L.1999, c.409, s.30; amended 2001, c.112.

N.J. Stat. § 17:48H-31 Notification of change of means for receipt of compensation.

31. Any certified organized delivery system which intends to change the means by which it receives compensation so that it will be compensated on a basis that entails the assumption of financial risk shall make application for licensure to the Commissioner of Banking and Insurance pursuant to this act. L.1999, c.409, s.31; amended 2012, c.17, s.51.

N.J. Stat. § 17:48H-32 Rules, regulations.

32. The Commissioner of Banking and Insurance shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to effectuate the purposes of this act. The commissioner shall adopt the rules and regulations within 180 days of the date of enactment of this act. L.1999, c.409, s.32; amended 2012, c.17, s.52.

N.J. Stat. § 17:48H-33 Applicability of health care quality act.

33. An organized delivery system which is licensed by the Department of Banking and Insurance shall be subject to the "Health Care Quality Act," P.L.1997, c.192 (C.26:2S-1 et seq.) and the regulations promulgated thereunder. L.1999, c.409, s.33; amended 2012, c.17, s.53.

N.J. Stat. § 17:48H-33.1 Adoption, implementation of standards by organized delivery system for electronic transactions.

1. a. Within 180 days of the adoption of a timetable for implementation pursuant to section 1 of P.L.1999, c.154 (C.17B:30-23), an organized delivery system which is either certified or licensed pursuant to P.L.1999, c.409 (C.17:48H-1 et seq.), or a subsidiary thereof that processes health care benefits claims as a third party administrator, shall demonstrate to the satisfaction of the Commissioner of Banking and Insurance that it will adopt and implement all of the standards to receive and transmit health care transactions electronically, according to the corresponding timetable, and otherwise comply with the provisions of this section, as a condition of its continued authorization to do business in this State. The Commissioner of Banking and Insurance may grant extensions or waivers of the implementation requirement when it has been demonstrated to the commissioner's satisfaction that compliance with the timetable for implementation will result in an undue hardship to an organized delivery system, its subsidiary or its covered persons. b. Within 12 months of the adoption of regulations establishing standard health care enrollment and claim forms by the Commissioner of Banking and Insurance pursuant to section 1 of P.L.1999, c.154 (C.17B:30-23), an organized delivery system or a subsidiary that processes health care benefits claims as a third party administrator shall use the standard health care enrollment and claim forms in connection with all health benefits plans for which the organized delivery system has contracted with a carrier to provide health care services. c. Twelve months after the adoption of regulations establishing standard health care enrollment and claim forms by the Commissioner of Banking and Insurance pursuant to section 1 of P.L.1999, c.154 (C.17B:30-23), an organized delivery system shall require that health care providers file all claims for payment for health care services. A covered person who receives health care services shall not be required to submit a claim for payment but, notwithstanding the provisions of this subsection to the contrary, a covered person shall be permitted to submit a claim on his own behalf, at the covered person's option. All claims shall be filed using the standard health care claim form applicable to the health benefits plan contract or policy. d. (1) An organized delivery system or its agent, hereinafter the payer, shall remit payment for every insured claim submitted by a covered person or that covered person's agent or assignee if the health benefits plan contract or policy provides for assignment of benefits, no later than the 30th calendar day following receipt of the claim by the payer or no later than the time limit established for the payment of claims in the Medicare program pursuant to 42 U.S.C. s.1395u(c)(2)(B), whichever is earlier, if the claim is submitted by electronic means, and no later than the 40th calendar day following receipt if the claim is submitted by other than electronic means, if: (a) the claim is an eligible claim for a health care service provided by an eligible health care provider to a covered person under the health benefits plan contract or policy; (b) the claim has no material defect or impropriety, including, but not limited to, any lack of required substantiating documentation or incorrect coding; (c) there is no dispute regarding the amount claimed; (d) the payer has no reason to believe that the claim has been submitted fraudulently; and (e) the claim requires no special treatment that prevents timely payment from being made on the claim under the terms of the health benefits plan contract or policy. (2) If all or a portion of the claim is denied by the payer because: (a) the claim is an ineligible claim; (b) the claim submission is incomplete because the required substantiating documentation has not been submitted to the payer; (c) the diagnosis coding, procedure coding, or any other required information to be submitted with the claim is incorrect; (d) the payer disputes the amount claimed; or (e) the claim requires special treatment that prevents timely payments from being made on the claim under the terms of the health benefits plan contract or policy, the payer shall notify the covered person, or that covered person's agent or assignee if the health benefits plan contract or policy provides for assignment of benefits, in writing or by electronic means, as appropriate, within 30 days, of the following: if all or a portion of the claim is denied, all the reasons for the denial; if the claim lacks the required substantiating documentation, including incorrect coding, a statement as to what substantiating documentation or other information is required to complete adjudication of the claim; if the amount of the claim is disputed, a statement that it is disputed; and if the claim requires special treatment that prevents timely payments from being made, a statement of the special treatment to which the claim is subject. (3) Any portion of a claim that meets the criteria established in paragraph (1) of this subsection shall be paid by the payer in accordance with the time limit established in paragraph (1) of this subsection. (4) A payer shall acknowledge receipt of a claim submitted by electronic means from a health care provider or covered person, no later than two working days following receipt of the transmission of the claim. (5) If a payer subject to the provisions of P.L.1983, c.320 (C.17:33A-1 et seq.) has reason to believe that a claim has been submitted fraudulently, it shall investigate the claim in accordance with its fraud prevention plan established pursuant to section 1 of P.L.1993, c.362 (C.17:33A-15), or refer the claim, together with supporting documentation, to the Office of the Insurance Fraud Prosecutor in the Department of Law and Public Safety established pursuant to section 32 of P.L.1998, c.21 (C.17:33A-16). (6) Payment of an eligible claim pursuant to paragraphs (1) and (3) of this subsection shall be deemed to be overdue if not remitted to the claimant or his agent or assignee by the payer on or before the 30th calendar day or the time limit established by the Medicare program, whichever is earlier, following receipt by the payer of a claim submitted by electronic means and on or before the 40th calendar day following receipt of a claim submitted by other than electronic means. In the event payment is withheld on all or a portion of a claim by a payer pursuant to subparagraph (b) of paragraph (2) of this subsection, the claims payment shall be overdue if not remitted to the claimant or his agent or a assignee by the payer on or before the 30th calendar day or the time limit established by the Medicare program, whichever is earlier, for claims submitted by electronic means and the 40th calendar day for claims submitted by other than electronic means, following receipt by the payer of the required documentation or modification of an initial submission. (7) An overdue payment shall bear simple interest at the rate of 10% per annum. e. As used in this subsection, "insured claim" or "claim" means a claim by a covered person for payment of benefits under an insured health benefits plan contract or policy for which the financial obligation for the payment of a claim under the health benefits plan contract or policy rests upon the organized delivery system. L.2001,c.67,s.1.

N.J. Stat. § 17:48H-33.2 Organized delivery system subject to regulations under C.17B:30-26 et seq.

2. An organized delivery system which is either certified or licensed pursuant to P.L.1999, c.409 (C.17:48H-1 et seq.) shall be subject to the provisions of P.L.1999, c.155 (C.17B:30-26 et seq.) and the regulations promulgated thereunder. L.2001,c.67,s.2.

N.J. Stat. § 17:48H-34 Provision of data, reports

34. a. A carrier that contracts with a licensed organized delivery system shall provide that system with any data or reports required by their contractual arrangement on a timely basis, in accordance with the terms of the contract. b. If a carrier fails to provide a report required pursuant to subsection a. of this section, the Commissioner of Banking and Insurance may, upon notice and hearing, assess a civil administrative penalty in an amount not less than $250 nor more than $1,000 for each day the carrier is in violation of this section. The penalty may be recovered in a summary proceeding pursuant to "The Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). L.1999,c.409,s.34.

N.J. Stat. § 17:48H-35 Documents deemed proprietary, confidential.

35. Any documents provided by a organized delivery system to the Department of Banking and Insurance pursuant to this act that are deemed by the Commissioner of Banking and Insurance to be proprietary, shall be confidential and shall not be considered public documents pursuant to P.L.1963, c.73 (C.47:1A-2). L.1999, c.409, s.35; amended 2012, c.17, s.54.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026