Bill > S523

Introduced Session

This bill provides physicians with the right to engage in joint negotiations over the terms and conditions of their contracts with health insurance carriers, that is, health, hospital and medical service corporations, commercial health insurers, and health maintenance organizations. The bill is based on legislation enacted in 2002 (P.L.2001, c.371) that authorized physicians and dentists to engage in joint negotiations with carriers, which legislation expired in 2008. The bill permits two or more independent physicians who are practicing in the geographic service area of a carrier to jointly negotiate with the carrier and engage in related joint activity over the terms and conditions of a proposed contract. The negotiations would be carried out through a joint negotiation representative selected by the physicians to act on their behalf. The terms and conditions that may be the subject of the negotiations include non-fee-related matters which may affect patient care, such as any of the following:· the definition of medical necessity and other conditions of coverage;· utilization management criteria and procedures;· clinical practice guidelines;· preventive care and other medical management policies;· patient referral standards and procedures, including, but not limited to, those applicable to out-of-network referrals;· drug formularies and standards and procedures for prescribing off-formulary drugs;· quality assurance programs;· respective physician and carrier liability for the treatment or lack of treatment of covered persons;· the methods and timing of payments;· other administrative procedures, including, but not limited to, eligibility verification systems and claim documentation requirements for covered persons;· credentialing standards and procedures for the selection, retention and termination of participating physicians;· mechanisms for resolving disputes between the carrier and physicians, including, but not limited to, the appeals process for utilization management and credentialing determinations; · the health benefits plans sold or administered by the carrier in which the physicians are required to participate;· the formulation and application of reimbursement methodology; · the terms and conditions of physician contracts, including, but not limited to, all products clauses, and the duration and renewal provisions of the contract; and· the inclusion or alteration of a contractual term or condition, except when the inclusion or alteration is required by a federal or State regulation concerning that term or condition; however, the restriction shall not limit a physician's rights to jointly petition the federal or State government, as applicable, to change the regulation. In addition, the bill provides that a proposed contract concerning fees and fee-related matters may be subject to joint negotiations if the Attorney General, in consultation with the Commissioner of Banking and Insurance, finds that the carrier has substantial market power in its service area and that any of the terms or conditions of the contract with the carrier pose an actual or potential threat to the quality and availability of patient care among covered persons. These matters include, but are not limited to, any of the following:· the amount of payment or the methodology for determining the payment for a health care service, including, but not limited to, cost of living increases;· the conversion factor for a resource-based relative value scale or similar reimbursement methodology for health care services;· the amount of any discount on the price of a health care service;· the procedure code or other description of a health care service covered by a payment and the appropriate grouping of the procedure codes;· the amount of a bonus related to the provision of health care services or a withholding from the payment due for a health care service; and· the amount of any other component of the reimbursement methodology for a health care service. The bill requires that a person or entity proposing to act as a joint negotiation representative shall submit a petition to the Attorney General, for his approval. The petition shall identify the representative, the physicians who the representative will represent, the intended subject matter of the proposed negotiations and other information specified in the bill. Upon submitting the petition, the representative shall pay a fee to the Attorney General, in an amount determined by the Attorney General, which shall be reasonable and necessary to cover the costs associated with carrying out the provisions of this bill. After the joint negotiation representative and the carrier have reached an agreement on the contractual terms or conditions that were the subject matter of their negotiations, the representative shall submit a copy of the proposed contract between the physicians and the carrier to the Attorney General, for his approval. The Attorney General shall provide written approval or disapproval of a petition or a proposed contract furnished by the representative no later than 30 days after receipt of the petition or proposed contract. The bill provides that a joint negotiation representative shall not engage in negotiations with a carrier unless the representative's petition has been approved in writing by the Attorney General, and a proposed contract between physicians and a carrier negotiated under this bill shall not be implemented unless the Attorney General has approved the contract. The bill further provides that either party may decline to negotiate or terminate negotiations. In either event, the representative shall so notify the Attorney General. The Attorney General shall approve a petition or a proposed contract if he determines that the petition or proposed contract demonstrates that the benefits which are likely to result from the proposed joint negotiations or contract, as applicable, outweigh the disadvantages attributable to a reduction in competition that may result from the proposed joint negotiations. In making his determination, the Attorney General shall consider physician distribution by specialty and its effect on competition in the geographic service area of the carrier. The bill provides that its provisions shall not be construed to:· permit two or more physicians to jointly engage in a coordinated cessation, reduction or limitation of the health care services which they provide;· permit two or more physicians to meet or communicate in order to jointly negotiate a requirement that at least one of the physicians, as a condition of participation with a carrier, be allowed to participate in all of the products offered by the carrier;· permit two or more physicians to jointly negotiate with a carrier to exclude, limit or otherwise restrict a non-physician or health care provider from participating in the carrier's health benefits plan based substantially on the fact that the health care provider is not a physician, unless that exclusion, limitation or restriction is otherwise permitted by law;· prohibit or restrict activity by physicians that is sanctioned under federal or State law or subject such activity to the requirements of this bill;· affect governmental approval of, or otherwise restrict activity by, physicians that is not prohibited under federal antitrust law; or· require approval of physician contract terms to the extent that the terms are exempt from State regulation under ERISA. The bill provides that its provisions shall not apply to a health benefits plan which is certified by the Commissioner of Human Services to the Attorney General as providing covered services exclusively or primarily to persons who are eligible for Medicaid or NJ FamilyCare. The bill requires the Attorney General, in consultation with the Commissioner of Banking and Insurance, to report to the Governor and the Legislature no later than four years after its effective date on its implementation, and to include in that report an assessment of the impact that the bill has had on health insurance premiums in the State. The report shall also include the Attorney General's recommendations as to whether the provisions of the bill shall be expanded to include other types of health care professionals and facilities. The bill repeals P.L.2001, c.71 (C.52:17B-196 et seq.), which expired in 2008. The bill takes effect 90 days after enactment.

Committee Categories

Jon Bramnick (R)*, 

Introduced in the Senate, Referred to Senate Commerce Committee (on 01/09/2024)

Official Document