FROM: DONALD BRYAN, ACTING COMMISSIONER
RE: P.L. 2001, C. 267 -- LICENSURE OR REGISTRATION OF THIRD PARTY ADMINISTRATORS AND CERTIFICATION OF THIRD PARTY BILLING SERVICES
P.L. 2001, c. 267 (the Act), enacted December 13, 2001, requires that beginning January 1, 2002, all third party administrators of health and dental benefits plans be licensed by or registered with the Commissioner of Banking and Insurance (Commissioner), and that all third party billing services be certified by the Commissioner. The Act further requires the Commissioner to adopt rules and regulations to implement its provisions.
The Act defines a "third party administrator" (TPA) as a person or entity that processes claims and pays claims on behalf of a benefits payer without assuming financial risk for the payment of health or dental benefits. A TPA includes (1) an entity not licensed as an insurer and not affiliated with or a subsidiary of an insurer, that processes claims on behalf of a benefits payer; (2) an entity that is a subsidiary or affiliate of an insurer that processes claims on behalf of the insurer; and (3) an entity that is a subsidiary or affiliate of an insurer that only processes claims on behalf of benefits payers other than insurers. Pursuant to the Act, a TPA shall not include an employee, affiliate or subsidiary of a benefits payer formed for the purpose of processing and paying claims solely on behalf of the benefits payer, nor a collection agency or bureau or pharmacy benefit manager. The Act further defines "benefits payer" to mean an insurer authorized to issue health or dental benefits plans in this State, or any other person that assumes financial risk for the payment of health or dental benefits and is obligated to pay claims for such benefits to providers or other claimants.
Pursuant to the Act, a TPA is required to be licensed if (1) it is not licensed as an insurer and is not an affiliate or subsidiary of an insurer, or (2) it is an affiliate or subsidiary of an insurer that only processes or pays claims on behalf of benefits payers other than insurers. A TPA is required to be registered with the Commissioner if it is a subsidiary or affiliate of an insurer that processes claims on behalf of both the insurer and benefits payers other than the insurer.
The Act also defines a "third party billing service" as a person or entity that is paid by a health care provider to process claims or claims payments on behalf of the health care provider. All third party billing services shall be certified by the Commissioner.
The Department has been receiving inquiries from persons and entities affected by the Act regarding their continuing operations pending the Department's promulgation of regulations. The purpose of this bulletin is to advise third party administrators and third party billing services, as those terms are defined within the Act, that they may continue to operate in this State until the Department adopts regulations implementing the Act. In the interim, the Department is requesting that such entities notify the Department's Life/Health Division of their name, address, telephone number and contact person, at the following address:
NJ Department of Banking and Insurance
Office of Life and Health - Attn: Tim Costello
20 West State Street
PO Box 325
Trenton, NJ 08625-0325
Phone: 609-292-5427 x50313
The Department further suggests that third party administrators and third party billing services familiarize themselves with the standards for licensure and registration contained in the Act to ensure that they are in full compliance with those requirements.
The Department anticipates proposing regulations implementing the Act within the near future. Interested parties may access the Department's website at "www.njdobi.org" to determine whether those regulations have been proposed.
1/17/02 ___ /s/ Donald Bryan_________Acting Commissioner