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  • NJ A3404
  • Permits hospitals to establish system for making performance-based incentive payments to physicians.
In Committee
Crossed OverPassedSignedDead/Failed/Vetoed
2016-2017 Regular Session
This bill permits hospitals to implement hospital and physician incentive plans to provide physicians with performance-based incentive payments to increase quality of care and reduce costs. A hospital that seeks to implement a plan will be required to establish a steering committee to: develop institutional and specialty-specific goals related to patient safety, quality of care, and operational performance; implement an incentive payment methodology that ensures fair and consistent payments that correlate with individual and collective physician performance; and adopt a mechanism to protect the financial health of the hospital. The plan may additionally include specific patient management tasks, care redesign initiatives, and patient safety and quality of care objectives. At least half of the members of the committee are to be physicians. In developing the goals for a plan, steering committees will be required to ensure that there exist no incentives to reduce the quality or provision of medically-necessary care or to exceed best practice standards. In developing the payment methodology for a plan, steering committees will be required to ensure that physician performances are objectively measured in light of each physician's own performance, the nature of the care provided, improvements in the physician's performance over time, and local and regional standards. Additionally, the methodology is to ensure that payments objectively correlate with physician performances and are uniformly applied with regard to all physicians participating in the plan. Overall payments to individual physicians under a plan will be limited to 50 percent of the total professional payments for services related to the cases for which that physician receives incentive payments under the plan. Hospital and physician incentive plans will be administered by an independent third party, which will be responsible for applying the plan's incentive methodology and calculating direct incentive payments to physicians based on the physician's performance in meeting the hospital's institutional and specialty-specific goals, as determined using an incentive payment methodology that meets the requirements set forth in the bill. If the plan includes multiple hospitals, the hospitals will utilize a facilitator-convener to coordinate with each hospital's independent third party administrator and steering committee to facilitate plan administration, disseminate best practices information, and serve as the point of contact with the Department of Health (DOH). Except for plans limited to specific clinical specialties or diagnosis related groups, hospital and physician incentive plans will apply to all admissions and all inpatient costs related to those admissions in a given program. Plans will be open to all surgeons and attending physicians of record who have been on the medical staff of the hospital for at least one year, except that this restriction will not apply to hospitalists and physicians who are new to the participating hospital's geographic area. Hospitals will have the discretion to additionally open their plans to other physicians involved in the provision of inpatient care. Each plan is to include a mechanism to limit incentives attributable to year-to-year increases in patient volume for physicians on staff with multiple admitting privileges. Patients are to be notified of a hospital and physician incentive plan in advance of admission. A hospital or facilitator-convener will be required to file a prospective plan with DOH prior to the anticipated start date of the plan, and will be required to submit an annual report to DOH detailing distributions to physicians, the plan's quality and cost performance standards, proposed revisions to the plan, and such other information as the department may require. DOH will be required to notify a hospital if its plan does not meet the requirements established under the bill, and provide the hospital with a reasonable opportunity to remedy any deficiencies in the plan. If a hospital does not bring its plan into compliance with the requirements of the bill, DOH will be permitted to terminate the plan. Physicians will be permitted to withdraw from a plan upon reasonable notice to the hospital, and hospitals may terminate a plan upon reasonable notice to DOH and to participating physicians. The bill amends P.L.1989, c.19 (C.45:9-22.4 et seq.) to provide that payments made to a physician under a hospital and physician incentive plan do not violate the statutory prohibition against physician self-referrals.
2nd Reading in the Assembly, Health and Senior Services, Substituted by another Bill
Substituted by S913 (1R)  (on 3/16/2017)
Date Chamber Action Description
3/16/2017 A Substituted by S913 (1R)
12/5/2016 A Reported out of Assembly Comm. with Amendments, 2nd Reading
12/5/2016 Assembly Health and Senior Services Hearing (10:00 12/5/2016 Committee Room 11, 4th Floor)
3/3/2016 A Introduced, Referred to Assembly Health and Senior Services Committee
Date Motion Yea Nay Other
Detail 12/5/2016 Assembly Health and Senior Services Committee: Reported with Amendments 13 0 0