Health law newsletter
June 2010
New Jersey Supreme Court Upholds Appellate Court Ruling in Garcia v. Health Net, Which Ruled that Wayne Surgical Center Did Not Violate Fraud Statute
The Supreme Court of New Jersey recently denied a petition by insurer, Health Net of New Jersey, to review the Appellate Court's decision in Garcia v. Health Net. This denial solidifies the Appellate Division's ruling that Wayne Surgical Center and its physician owners did not violate the State's Insurance Fraud Prevention Act by waiving out-of-pocket costs for patients, or by referring to patients to an ASC in which they owned an interest without first notifying the patients' insurer. This decision is widely viewed as a victory for out-of-network providers. However, proposed legislation seeks to criminalize the waiver of patient out-of-pocket expenses.
Payment of Out-of-Network Benefits
Out-of-network health care providers (i.e., physicians and other providers who do not participate in certain third-party health insurance contracts) have become the focus of aggressive tactics on the part of New Jersey insurance carriers ("Payors"). Payors frequently remit reimbursement checks directly to patients for services rendered by out-of-network providers, despite the insurance companies' knowledge of the existence of a duly-executed assignment of benefits. As a result, some providers are forced to engage in time-consuming and costly collection efforts to obtain reimbursement the their patients have lawfully assigned to them. Payors have employed this practice knowing that physicians are unlikely to sue their patients due to the cost and the potential damage to the physicians' relationships with patients and referring physicians.
On January 16, 2010, then-Governor Jon Corzine signed into law an amendment to N.J.S.A § 26:2S-6.1, which, effective January 17, 2011, requires carriers that offer a managed care plan with out-of-network benefits to comply with a patient's assignment of benefits, and remit payment for reimbursements for out-of-network services directly to and in the name of the health care provider who provided the services. Alternatively, carriers may remit payment for out-of-network services to the health care provider and the patient as joint payees, with a signature line for each of the payees. Any payments made only to the patient (rather than the provider) under the foregoing circumstances will be considered unpaid and, unless remitted to the provider within the prescribed timeframes, will be considered overdue and subject to a prescribed interest charge.
The foregoing amendment is a significant victory in the campaign against insurers that employ unfair practices aimed at coercing providers to join their networks and accept reduced fee schedules.
Bill Would Set Time Limit on Suits Against Regulated Professionals
The state Assembly recently gave final approval to legislation that would impose deadlines on actions against regulated professionals. By a 77-0 vote, the Assembly passed S-936, which requires that consumer complaints involving professionals regulated by the Division of Consumer Affairs be resolved within 120 days of the filing of a complaint. The chief sponsor of the legislation, Sen. Gerald Cardinale, R-Bergen, has long argued that complaints against regulated professionals - such as doctors, architects, accountants and home inspectors - often take years. Although various attorneys general have pledged to move cases at a quicker pace, Cardinale has said deadlines need to be codified to ensure that happens.
CAP on NJ ACF Tax May be Lifted
New Jersey Governor Chris Christie recently revealed a budget proposal that would increase the annual assessment imposed on Ambulatory Care Facilities ("ACFs") (e.g., imaging facilities and ambulatory surgical centers). The proposal would eliminate the $200,000 cap on the annual assessment, meaning that there would no longer be a limit on the amount of the assessment. Currently, ACFs with annual gross receipts of more than $300,000 pay a 2.95% tax on gross receipts, with a maximum annual tax of $200,000. At an assessment rate of 2.95%, the $200,000 cap is reached when a facility earns gross receipts of about $6.78 Million. The net effect of this change would be to increase the assessment on all ACFs that have annual gross receipts greater than this amount.
Christie also proposed liftng the cap on the 0.53% hospital tax. The new revenues will apparently be used to obtain additional federal dollars for hospitals through the Medicaid matching program. The revenue added by lifting the caps on both the ASC tax and the hospital tax is expected to provide an additional $11 million to hospitals, after accounting for the higher tax rate. ACFs would receive no additional funding.
About Our Law Firm
The attorneys at Frier Levitt represent a broad range of clients in healthcare law, transactional and regulatory matters, pharmacy law, internet law, matrimonial law, real estate and corporate representation tailored to the needs of business and individual clients.
Frier & Levitt, LLC
84 Bloomfield Avenue
Pine Brook, New Jersey 07058
973-618-1660