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|Health Maintenance Organizations (HMOs) Regulatory Requirements|
Part of the certificate of authority approval process involves obtaining approval of contracts for policy forms, as well as contracts with health care providers and intermediary organizations for the provision of health care services. In addition to the approval obtained as part of the certificate of authority process, HMOs also must file new and revised contracts as they occur, or as may be required by law. There are core sets of services, or benefits therefore, that HMOs must provide in their policy forms. Likewise, there are certain standards that HMOs must meet with respect to their provider contracts, whether the HMO contracts directly with the health care provider or through an intermediary.
It should be noted that New Jersey has a "standardized" market for nongroup and small employer group health benefits plans, and the laws for those specific markets need to be considered. Special rules apply for obtaining approval or deemed approval of policy forms for those markets. The HMO should consult the Individual Health Coverage (IHC) and Small Employer Health Benefits (SEH) Programs. In addition, if an HMO wants to participate in New Jersey's Medicaid Managed Care or NJ FamilyCare programs, the HMO will need to consult with the Division of Medical and Health Services within the New Jersey Department of Human Services.
As is the case for many states, New Jersey has a few special features in its laws that HMOs need to be aware of. First, an HMO is required to offer at least one Point-of-Service (POS) product to employer groups when the HMO does business in New Jersey , though there are some exceptions to this standard. A product that allows open access within the network does not satisfy the POS offer requirement. Second, whether or not an HMO offers a nongroup health benefits plan, it often will be liable for a portion of the losses incurred in that market, and will be required to pay an assessment for those losses. Third, there are certain rating standards that apply in certain markets, including the nongroup and small employer group markets.
New Jersey has explicit standards regarding reserves, net worth, and deposits that each HMO must maintain. HMOs are subject to both market conduct and financial examination by the New Jersey Department of Banking and Insurance, as well as periodic assessments of the quality of care provided and continuous quality improvement programs. In addition, each HMO is required to submit an Annual Supplement, which includes financial information, as well as other performance information; certain financial reporting may be required to be submitted more frequently. Also, HMOs must provide certain information on an annual basis relating to specific performance indicators and consumer satisfaction. This information, depending upon the HMO's volume of enrollment, will be included in an annual performance report produced and distributed by the New Jersey Department of Banking and Insurance.
HMO decisions regarding medical necessity determinations for services covered under a health benefits plan are subject to both a required two-stage internal appeal process, as well as a state-managed external appeal process, called the Independent Health Care Appeals Program (IHCAP). The costs of IHCAP review, using a pre-established per case fee (for a preliminary and full review), are borne by the HMOs. Although at one time, the decisions of the IHCAP were non-binding recommendations, as of January 16, 2001, the decisions issuing from the IHCAP are binding upon HMOs.
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New Jersey Department of Banking and Insurance