New Jersey - Volume VII, Number 10 - October, 1998
New Jersey - Volume VII, Number 10 - October, 1998
WHITMAN NOMINATES INSURANCE FRAUD CZAR
The Automobile Insurance Cost Reduction Act, enacted in May of this year, created the Office of Insurance Fraud Prosecutor to consolidate agencies that combat fraud. Governor Whitman has nominated Assistant Attorney General Edward M. Neafsey, Chief of the Environmental Crimes Bureau in the Division of Criminal Justice, to fill the post of Special Insurance Fraud Prosecutor. Rather than serving as an independent prosecutor, as initially proposed, Neafsey will report directly to the Attorney General. Undoubtedly, the Fraud Prosecutor will assist county prosecutors in investigating and prosecuting cases under the Health Care Claims Fraud Act which makes health care claims fraud a criminal offense and provides for forfeiture of a professional license in certain instances (Statlaw, Vol. 7, No. 2).
PROMPT CLAIMS PAYMENT LEGISLATION MOVES OUT OF COMMITTEE
The so-called "Prompt Pay" legislation, Assembly Bill 2121, was unanimously released from the Assembly Banking & Insurance Committee on September 14th with an anticipated hearing by the full Assembly on October 29th. The legislation would expand existing law regarding prompt payment of claims by health insurance carriers and HMOs to include health, hospital, medical and dental service corporations, dental plan organizations, and any intermediary contracted or affiliated with the carrier to perform administrative claims functions. In addition, the law would reduce the amount of time in which a claim must be paid or contested by a carrier from 60 days to 30 days for manual claims and 17 days for electronic claims; require that a carrier pay or deny a contested claim within 30 days rather than the current 90 days; establish an independent third-party payment appeals program, utilizing an independent review organization, to promptly address payment complaints from providers and insureds; impose penalties, in addition to interest charges, of $500 per claim for each day an uncontested claim or uncontested portion of a claim is processed beyond the 30-day/17-day limit and $1,000 per day for each day a carrier fails to respond to review organization inquiries within a specified time period. The State must audit the carriers, at the carriers’ expense, to verify compliance with the prompt payment law. Physicians should contact their representatives in the Assembly to express support for the measure.
OIG ISSUES ADVISORY OPINION ON AMBULATORY SURGERY CENTER
The Office of Inspector General for the U.S. Department of Health & Human Services ("OIG") has issued Advisory Opinion 98-12 addressing whether a proposed joint venture among several orthopedic surgeons and anesthesiologists specializing in pain management to establish an ambulatory surgery center ("ASC") violates the federal anti-kickback statute. ASC ventures typically violate the anti-kickback statute because physician investors can benefit financially from their referrals by sharing in the facility fees. Most ASC joint ventures do not qualify for the small investment entity safe harbor and a proposed ASC safe harbor remains unadopted. Here, the OIG determined that the proposed venture is "substantively equivalent" to an "all surgeon" ASC and would not be subject to sanctions. Key factors in the OIG’s decision include: the additional financial return to the physician from the facility fee revenue vis-a-vis the professional fee, was not likely to result in overutilization; the physician owners would make substantial financial investments and incur financial exposure in the venture; each physician would perform the majority of his or her procedures at the ASC; the return on investment would be proportional to the physician’s capital investments, and not based on referrals; and income from Medicare cases at the ASC would be minimal. The proposed ASC safe harbor, when adopted, may offer even more protection, perhaps extending to other "non-cutters" besides anesthesiologists.