INSURANCE

DEPARTMENT OF BANKING AND INSURANCE

DIVISION OF INSURANCE

Health Benefit Plans
Acknowledgement of Receipt of Claims; Denied and Disputed Claims

Proposed Amendments: N.J.A.C. 11:22-1.3 and 1.6

Authorized By: Karen L. Suter, Commissioner, Department of Banking and Insurance

Authority: N.J.S.A. 17:1-8.1, 17:1-15e, 17B:30-13.1, P.L. 1999, c. 154 and 155 (codified at 17B:30-23 et seq.), 26:2J-15b.

Proposal Number: PRN 2001-379

Submit comments by October 17 , 2001 to:

Karen Garfing, Assistant Commissioner
Regulatory Affairs
Department of Banking and Insurance
20 West State Street
P.O. Box 325
Trenton, New Jersey 08625-0325

Fax: (609) 292 -0896

Email: Legsregs@dobi.state.nj.us

The agency proposal follows:

Summary

The Department of Banking and Insurance ("Department") rules at N.J.A.C. 11:22-1 which were proposed on June 5, 2000 and published for adoption in the January 2, 2001 New Jersey Register, see 33 N.J.R. 105(a), implement P.L. 1999, c. 154 concerning health information electronic data interchange technology ("HINT"). These rules set forth standards for the prompt payment of claims relating to health benefit plans and dental plans. The Department is amending provisions to these rules in order to clarify the rules and address a possible conflict between N.J.A.C. 11:22-1.3 and 1.6.

The Department is amending N.J.A.C. 11:22-1.3(a), which establishes the time frames by which carriers shall acknowledge receipt of claims from a covered person or health care provider. The Department's amendments to this subsection seek to clarify that acknowledgement, if requested by the health care provider or covered person, is due after receipt of the claim, or receipt of the request for an acknowledgement, whichever is later.

The Department is also amending N.J.A.C. 11:22-1.3(b) to be consistent with N.J.A.C. 11:22-1.6. The Department is amending this provision to require written notice of a dispute to the covered person only when there is an increased responsibility for payment. This change was made to N.J.A.C. 11:22-1.6 upon adoption in response to comments, but a parallel provision in N.J.A.C. 11:22-1.3 was not similarly amended.

Finally, the Department is amending N.J.A.C. 11:22-1.6, which sets forth the responsibilities of carriers when a claim is denied or disputed. The Department is deleting the current provisions of N.J.A.C. 11:22-1.6(a)1 and adding provisions to clarify the difference between claims being denied because of administrative reasons, such as they cannot be entered into the claims system; and claims that are being denied because of substantive reasons, such as the group is not covered on the date of service. In addition, the Department is adding language in order to avoid the need for the carrier, with the consent of the provider, to issue numerous interest checks for very small amounts.

Social Impact

The proposed amendments address a potential conflict between provisions of the rules resulting from a change on adoption based on public comments; a parallel provision was inadvertently not also amended. This amendment provides clear direction to carriers about their compliance obligations.

The proposed amendments should prevent providers from having to submit claims repeatedly for different denial reasons. The proposed amendments should help carriers avoid the need for complete review when claims are not submitted in a form which allows them to be entered into the claims system.

Additionally, the amendments avoid the need for the carrier to issue numerous interest checks for very small amounts.

Economic Impact

These proposed amendments have minimal economic impact separate from the currently adopted rules. These amendments may save costs for carriers in that it permits them to aggregate interest amounts under a dollar, with the consent of the provider. This avoids the need for the carrier to write numerous checks for very small amounts.

Federal Standards Statement

A Federal standards analysis is not required because the proposed amendments are not subject to any Federal standards or requirements.

Job Impact

The Department does not anticipate that these proposed amendments will result in the generation or loss of jobs.

Agriculture Industry Impact

The Department does not expect any impact on the agriculture industry from the proposed amendments.

Regulatory Flexibility Analysis

The proposed amendments may apply to some carriers that constitute "small businesses" as that term is defined in the Regulatory Flexibility Act at N.J.S.A. 52:14B-16 et seq. The Department does not believe that the reporting; recordkeeping and other compliance requirements of the proposed amendments, as described in the Summary above, should entail a large capital expense for carriers (see Economic Impact above). The Department does not anticipate that insurers will need to employ professional services in order to comply.

The Department does not believe that it would be appropriate to reduce, alter or eliminate the requirements of these amendments based on the size of the carrier involved. Carriers of all sizes enter into contracts with providers and insureds to pay claims promptly. When payment does not occur because a claim is denied, the Department believes it is appropriate for all payers, regardless of size, to provide the reasons why a claim was disputed or denied. Therefore, no relaxation of the rules based on business size has been provided.

Full text of the proposal follow (additions indicated in boldface thus; deletions indicated in brackets [thus]):

11:22-1.3 Acknowledgement of receipt of claims

(a) A carrier or its agent shall acknowledge receipt of a claim if requested by the health care provider or covered person. A health care provider or covered person may request acknowledgement of a particular claim(s) or of all claims to be submitted in the future. The acknowledgement of the claim is due after receipt of the claim or receipt of the request for an acknowledgement, whichever is later. The acknowledgement shall be provided by the same [means it was received upon request from a health care provider or covered person either] method utilized in the transmission of the claim(s);

1. If submitted by electronic means, no later than two working days following receipt of a claim or a request for an acknowledgement submitted by electronic means, whichever is later. The acknowledgement of receipt of an electronic claim shall go to the entity, [from which the carrier received the claim] that made the request; or

2. If submitted by written notice, no later than 15 working days following receipt of a claim or a request for an acknowledgement submitted by other than electronic means, whichever is later. Written claims or requests for an acknowledgement are considered received based on the U.S. mail postmark date.

(b) The carrier or its agent shall provide written notice to the provider, and also to the covered person when he or she will have increased responsibility for payment, within 30 or 40 calendar days of receipt of the claim, whichever is applicable, if the carrier disputes or denies a claim, in full or in part. The notice shall comply with the requirements of N.J.A.C. 11:22-1.6. If only a portion of a claim is disputed or denied, the carrier or its agent shall remit payment for the uncontested portion in accordance with N.J.A.C. 11:22-1.5.

11:22-1.6 Denied and disputed claims

(a) If a carrier or its agent denies or disputes a claim, in full or in part, the carrier or its agent shall, within 30 or 40 calendar days of receipt of the claim, whichever is applicable, [and] notify both the covered person when he or she will have increased responsibility for payment and the provider of the basis for its decision to deny or dispute, including:

1. The identification and explanation of all reasons why the claim was denied or disputed.

i. [A carrier or its agent shall not deny or dispute a claim for reasons other than those set forth in the initial notice unless information or documentation relevant to the claim is received after the initial review and such documentation leads to additional reasons to deny or dispute which were not present at the time of initial review.] If a claim is denied because it cannot be entered into the claims system, then all reasons why the claim cannot be entered into the claims systems shall be included.

    1. Reasons why a claim cannot be entered into the claims system are: group not covered on date of service; employee/dependent not covered on date of service; non-payment of premium; missing data fields (for example, CPT code, date of service, provider name); and ineligible provider.

iii. If the reasons why a claim cannot be entered into the claims system are subsequently cured and the claim is entered, the carrier’s first review after the claim is entered shall identify all applicable reasons for any denial or disputed claim.

2. – 4. (No change.)

    1. (No change.)
    2. If the carrier or its agent fails to pay a clean claim within the time limits set forth in N.J.A.C. 11:22-1.5, the carrier shall include simple interest on the claim amount at the rate of 10 percent per year and shall either add the interest amount to the claim amount when paying the claim or issue an interest payment within 14 days of the payment of the claim. Interest shall accrue beginning 30 or 40 days, as applicable, from the date all information and documentation required to process the claim is received by the carrier. The carrier may aggregate interest amounts under a dollar, with the consent of the provider.

(d) and (e) (No change.)