New NJ Law Requires Managed Care Plans to Pay Non-Participating Healthcare Providers Directly on Basis of Patient Assignment of Benefits
Wolff & Samson Health Law Alert
On January 16, 2010, then-Acting New Jersey Governor Sweeney signed into law Senate Bill S114. This new law will require managed care plans offering out-of-network coverage to pay non-participating providers directly for healthcare services rendered to a patient if the patient has assigned his or her health insurance benefits to the non-participating provider (the “Assignment Law”). The Assignment Law – which will take effect on January 16, 2011 – should significantly assist non-participating providers who have found it increasingly difficult to get paid as a result of certain carriers’ recent practices to disregard patient assignment of benefits and pay patients directly for the healthcare services they receive.
Background –Assignment of Benefits to Non-Participating Providers
A patient will typically assign his or her rights under a health insurance plan to the provider of medical services, which is formally accomplished by signing an assignment form upon intake/admission. This enables the healthcare provider to send a claim directly to, and receive reimbursement directly from, the patient's health insurer for services rendered to the patient.
Certain health insurance carriers, however, have recently disregarded patients’ assignment of insurance benefits to non-participating providers; they routinely include anti-assignment clauses in their contracts with patients and refuse to discuss out-of-network claims with non-participating providers. These carriers remit reimbursement for services rendered by non-participating providers directly to the patients who often do not pay the non-participating providers, which results in significant administrative burdens.
Requirements of the Assignment Law
The Assignment Law should reduce these difficulties by requiring managed care plans to pay a non-participating provider directly in cases where a patient assigns his or health insurance benefits to the non-participating provider. Specifically, the Assignment Law requires the following:
- Managed care plans that offer both in-network and out-of-network plans must remit payment for covered healthcare services directly to the healthcare provider in the form of a check payable to the healthcare provider, or in the alternative, to the healthcare provider and patient as joint payees, with a signature line for each of the payees.
- The payment must be made in accordance with New Jersey’s Prompt Pay Law, which generally requires the payment of “clean claims” within 30 days.
- If payment is made only to the patient rather than the non-participating healthcare provider, the claim will be considered unpaid; this means that if payment is not made to the non-participating provider in the manner required by the Assignment Law and within the time frames specified in the Prompt Pay Law, the payment will be considered overdue under the Prompt Pay Law and subject to an interest charge.
For more information, please contact one of the following attorneys in our Health Care and Hospital Group: