New Jersey - Volume VI, Number 9 - September, 1997

NEW LAWS AFFECT MANAGED CARE, FRAUD PREVENTION

Expanding on HMO regulations adopted earlier this year (Statlaw, Vol. 6, No. 3), the new Health Care Quality Act ("the Act") extends those protections to about three dozen different managed care plans offered by health insurance companies in New Jersey, including insurance companies that contract with preferred provider organizations. The Act, effective February 1998, bars so-called "gag clauses" in provider contracts; requires plans to offer a point-of-service option covering out-of-network care; requires utilization decisions to be made by a physician; prohibits utilization decisions that retrospectively deny coverage for services provided to a covered person when prior approval was obtained from the carrier (unless approval was based upon fraudulent information); provides an "Independent Health Care Appeals Program" for patients to appeal treatment or coverage denials; and establishes certain due process rights when a physician is removed from a panel.

The New Jersey Insurance Fraud Prevention Act ("the Act") was recently amended to provide for referral to the State Board of Medical Examiners of a practitioner who has violated the Act (or any insurance fraud prevention law of another state) for possible action against the practitioner, including suspension or revocation of license. Although a violator can enter into a consent agreement with the Department of Banking and Insurance, this does not preclude licensure action or criminal prosecution, unless the consent agreement specifically provides otherwise. The law also amends the Medical Board's confidentiality provisions to permit it to share information on pending investigations with the Division of Insurance Fraud Protection or with any other law enforcement agency. Other amendments affect the PIP fee schedule. These provisions are immediately effective.

FTC APPROVES NEW JERSEY PHARMACY NETWORK PLAN

The Federal Trade Commission ("FTC") has decided not to challenge on antitrust grounds a pharmacist network--Strategic Health Outcomes ("SHO")--to be offered by the New Jersey Pharmacists Association for diabetes and asthma self-management services. SHO will contract with insurers, HMOs, managed care organizations, pharmacy benefit managers, and third-party payers for these services. (Medically necessary diabetes self-management services are a state-mandated benefit that must be offered by insurers.) The FTC found that the network meets non-exclusivity and financial risk-sharing requirements and that sufficient competitors, including physicians, exist within the market so that there is no real risk of SHO having an anticompetitive effect on prescription drug prices.

POSTSCRIPT: It seems the new direct lab billing law, reported in last month's Statlaw (Vol 7, No. 8), is having some "unexpected" results: labs apparently are billing at higher rates than did physicians, lab results are not getting to the physicians in a timely manner, and some patients feel they can no longer have testing done for sexually transmitted diseases or for pregnancy and be assured of confidentiality.