New Jersey - Volume XIII, Number 5 - May, 2004

MSNJ CHALLENGES RELEASE OF PHYSICIAN LIABILITY INFORMATION On May 7, 2004, Kern Augustine Conroy & Schoppmann filed, on behalf of the Medical Society of New Jersey, a federal civil rights suit challenging the State's release of physicians’ medical liability histories to The Record newspaper and challenging the Constitutionality of the State's Health Care Consumer Information Act. The suit has been assigned to federal District Court Judge William Bassler. Judge Bassler has allowed The Record to intervene in the case and will hear oral argument on June 7, 2004. Pending oral argument, the parties have agreed that no liability data will be turned over by the State to The Record or to any other media outlet. Prior to the filing of the suit, the State was prepared, on May 11, 2004, to provide The Record with the liability data the paper sought.

STATE PROPOSES RULES GOVERNING THIRD PARTY BILLERS The NJ Department of Banking & Insurance (DOBI) has proposed rules establishing the framework for the approval of third-party billing services (TPAs), as required by the statute enacted in December 2001. The rules attempt to ensure that TPAs possess the minimum qualifications necessary to protect consumers and the businesses with which TPAs contract. Under the law, no person or entity may hold itself out as being a TPA unless certified by DOBI. TPAs must obtain certification by filing an application with the state which requires, among other things, that a TPA: certify that it is familiar with all pertinent statutory and regulatory requirements and that it has met or exceeded those requirements; provide information on the persons responsible for conducting the affairs of the TPA; disclose how the TPA is compensated; and describe its quality assurance procedures and provisions for complying with the state’s prompt pay laws. The TPA must have a written contract with clients that includes: the services to be provided; the financial arrangements to be used if the service accepts monies on the client’s behalf; the respective liability of the client and TPA for the accuracy and eligibility of claims and prompt submission of claims; responsibilities of the TPA regarding maintaining back-up systems against loss of records; and maintenance of appropriate insurance coverage against the risk of loss. If a TPA accepts monies on behalf of a client it is deemed under the law to be acting in a fiduciary capacity on the client’s behalf and such monies must be kept in a separate account maintained in the name of the client or jointly with the service. Temporary initial certification is available for up to one year. Violators can be assessed substantial monetary penalties and/or loss of certification. There will be a 60-day comment period on the proposed rules. KACS can assist physicians with review and negotiation of TPA contracts.

STATE PROPOSES RULES REGARDING IN-NETWORK AND OUT-OF-NETWORK COVERAGE The NJ Department of Health & Senior Services (DHSS) has proposed rules implementing the statute that prohibits carriers offering point-of service and preferred provider plans from basing the status (as in-network or out-of-network) of a health care facility solely on the status of the admitting or treating practitioner in determining whether a covered person is eligible for in-network or out-of-network benefits for the facility’s services. The rules would allow the carrier to still determine a covered person’s eligibility for in-network or out-of-network benefits based on whether the covered person or, in some cases, the facility complied with any expressed pre-authorization requirements. Carriers would be required to issue explanations of benefits that clearly show why in-network benefits have been reduced, or substituted by out-of-network benefits, and any remaining responsibility of the covered person for payment of charges. Comments will be accepted by DHSS through June 4, 2004.

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