Whether an ODS must become certified or licensed depends upon whether the ODS assumes financial risk from the carrier. An ODS that assumes financial risk must become licensed, unless the Department determines the financial risk is de minimus, as set forth in regulation. An ODS that does not assume financial risk or that is determined to assume only a de minimus financial risk must become certified.

Whether an ODS must become licensed or certified, it must meet certain minimum standards regarding the functions that the ODS is or intends to perform under contract with carriers. The standards are substantially similar to those that carriers would have to comply with if they were performing the specific functions themselves in accordance with the Health Care Quality Act, P.L. 1997, c.192 (as codifed, generally: N.J.S.A. 26:2S-1 et seq.). This is because the Organized Delivery System Act states at N.J.S.A. 17:48H-33 that both licensed and certified ODSs are subject to the Health Care Quality Act.

The Health Care Quality Act and rules govern certain operations of carriers that offer health benefits plans with utilization management components and/or on a managed care basis. The Department has established nine broad categories of activities representing functions governed by the Health Care Quality Act that are often delegated by carriers.