S3063

An Act concerning reimbursement rates under certain managed care network agreements and supplementing P.L.1997, c.192 (C.26:2S-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. In reviewing any network services management agreement between a carrier and a network services management organization, under a managed care plan pursuant to section 19 of P.L.1997, c.192 (C.26:2S-18):

(1) the Commissioner of Banking and Insurance shall not approve any such agreement if the reimbursement rate to health care providers in the network under that agreement, when compared to the reimbursement rate under any current or previous agreement or under any other arrangement by which providers in the network are paid for the same services, is reduced:

(a) by more than two percent per year in any year when, during the previous calendar year, premiums charged to subscribers under any managed care plan of the carrier increased by five percent or less; or

(b) by more than one percent per year in any year when, during the previous calendar year, premiums charged to subscribers under any managed care plan of the carrier increased by more than five percent, but no more than 10 percent.

(2) the commissioner shall not approve a network services management agreement with any reduction in the reimbursement rate to health care providers in the network under that agreement if, during the previous calendar year, premiums charged to subscribers under any managed care plan of the carrier increased by more than 10 percent.

(3) the commissioner may approve a network services management agreement which results in a reimbursement rate reduction in excess of two percent per year, but only if the carrier agrees to discontinue any executive bonuses or other salary incentives in any year in which the reduction in the reimbursement rate exceeds two percent.

b. The commissioner shall ensure that a network services management agreement shall maintain the network adequacy standards established pursuant to section 19 of P.L.1997, c.192 (C.26:2S-18) and N.J.A.C.11:24A-4.10.

c. The commissioner shall prepare a jobs impact statement, which may include an assessment of the number of jobs to be generated or lost if the agreement should be approved; a determination as to how many of these jobs are short-term and temporary in nature; and how many are of a long-term and more permanent nature. In preparing the jobs impact statement the commissioner may consult with the Commissioner of Labor and Workforce Development.

d. As used in this section, a “network services management organization” means an entity, other than a carrier, which contracts with a carrier to provide, undertake to arrange, or administer health care services, supplies or durable medical goods to covered persons through health care providers pursuant to a network services management agreement.

2. This act shall take effect immediately and shall apply to network services management agreements submitted to the commissioner for approval on or after that date.

STATEMENT

This bill is intended to mitigate the economic impact resulting from reductions in reimbursement rates to health care providers under network services management agreements between carriers and network services management organizations under managed care plans, and, similarly, to consider the potential for jobs impact associated with such agreements.

The bill directs the Commissioner of Banking and Insurance, in reviewing any network services management agreement between a carrier and a network services management organization, not to approve any such agreement if the reimbursement rate to health care providers in the network under that agreement, when compared to the reimbursement rate under any current or previous agreement or under any other arrangement by which providers in the network are paid for the same services, is reduced:

by more than two percent per year in any year when, during the previous calendar year, premiums charged to subscribers under any managed care plan of the carrier increased by five percent or less; or

by more than one percent per year in any year when, during the previous calendar year, premiums charged to subscribers under any managed care plan of the carrier increased by more than five percent, but no more than 10 percent.

The commissioner shall not approve a network services management agreement with any reduction in the reimbursement rate to health care providers in the network under that agreement if, during the previous calendar year, premiums charged to subscribers under any managed care plan of the carrier increased by more than 10 percent.

The commissioner may approve a network services management agreement which results in a reimbursement rate reduction in excess of two percent per year, but only if the carrier agrees to discontinue any executive bonuses or other salary incentives in any year in which the reduction in the reimbursement rate exceeds two percent.

The bill further requires the commissioner to ensure that a network services management agreement maintains the network adequacy standards established pursuant to the provisions of the “Health Care Quality Act,” and the regulations promulgated pursuant to that act.

The bill also requires the commissioner to prepare a jobs impact statement, which may include an assessment of the number of jobs to be generated or lost if the agreement is approved; a determination as to how many of these jobs are short-term and temporary in nature; and how many are of a long-term and more permanent nature. In preparing the jobs impact statement the commissioner may consult with the Commissioner of Labor and Workforce Development.

As used in the bill, a “network services management organization” means an entity, other than a carrier, which contracts with a carrier to provide, undertake to arrange, or administer health care services, supplies or durable medical goods to covered persons through health care providers pursuant to a network services management agreement.