HMO RULES AMENDED TO STRENGTHEN FINANCIAL OVERSIGHT

Following a December 1998 public policy forum that addressed improving regulatory oversight of the financial condition of HMOs in New Jersey, the Department of Health and Senior Services, with the Department of Banking and Insurance, has proposed amendments to: require pre-operational state audits of an HMO prior to issuing a certificate of authority; require that a minimum of 60% of an HMO’s admitted assets be in cash, cash equivalents or approved investments; increase requirements for HMO guarantors; permit disapproval of an HMO’s payment of dividends if such payment would adversely impact the HMO’s compliance with state rules; require an HMO to maintain reserve liabilities in an amount sufficient to provide for continued health care services to members who, on the date of termination of an HMO contract, are confined in an inpatient facility until discharge from the facility; change the basis and formula for determining HMO solvency deposits and restricting deposit withdrawals; require an HMO to submit a plan to the state that assures continuation of services and benefits to members when the HMO is declared insolvent and placed in rehabilitation or liquidation; require HMOs to file quarterly and annual certifications (with an actuarial opinion) that its reserves are sufficient; and require HMOs to quarterly certify the HMO’s reinsurance, insolvency and stop loss insurance arrangements. Future amendments will address pre-operational review of unlicensed subcontractors and the standardization of rate filing. Comments to the rules will be accepted by the Department of Health and Senior Services until March 31, 1999.

HIP UPDATE: On March 4^th, the New Jersey Superior Court (Judge Lintner, Chancery Division) ordered that HIP of New Jersey be liquidated by March 31, 1999 and that patients must seek to enroll in other HMOs prior to that date. Kern Augustine represents the Medical Society of New Jersey in these proceedings.

DIAGNOSTIC TESTING RULES ADOPTED BY LICENSING BOARDS

Effective March 1, 1999, physicians in New Jersey may not bill patients or any third-party payor for seven diagnostic tests which the State Board of Medical Examiners ("Medical Board") has determined fail to yield data of sufficient clinical value in the development, evaluation or implementation of a plan of treatment. The seven tests are spinal diagnostic ultrasonography/ultrasound imaging of the spine, iridology, reflexology, surrogate arm mentoring, brain mapping (when not done in conjunction with appropriate neurodiagnostic testing), surface EMG, mandibular tracking and stimulation, videofluoroscopy, and computer supported range of motion tests. State statute (see Statlaw, Vol. VII, No. 11.3) directed various professional licensing boards to adopt a list of valid diagnostic tests to be used in conjunction with the recently adopted PIP rules regarding reimbursable diagnostic tests. The licensing boards go further by defining specific diagnostic tests for which their licensees may not charge any patient or payer, irrespective of the origin of an injury. The rules also set forth the circumstances under which certain other tests will be deemed valid and billable, including MRI, CAT scans, EEG, needle EMG, thermography, evoked potentials and nerve condition velocity, and sonograms/ultrasound (when used in the acute phase to evaluate the abdomen and pelvis for intra-abnormal bleeding). The Chiropractic Board’s rules allow chiropractors to bill for surface EMG, videofluoroscopy, and computer supported range of motion tests, under specified conditions. The Medical Board will next publish rules ("Diagnostic II") addressing standards for reports, delegation of tasks to non-physicians, and what it calls "certain suspect business practices" related to diagnostic testing.