QUESTIONS & ANSWERS REGARDING THE ESTIMATED SECOND INTERIM DISTRIBUTION


Q1: How is this Estimated Second Interim Distribution different from the First Interim Distribution?

A1: There is very little difference in how this Estimated Second Interim Distribution was determined when compared to the First Interim Distribution. The main difference between these two distributions is that the Estimated Second Interim Distribution is based on a 50 percent cumulative distribution rate, where the First Interim Distribution was based on a 35 percent distribution rate. Since the Estimated Second Interim Distribution is based on a 50 percent cumulative distribution rate (to ensure that all eligible providers are paid at 50 percent of their Estimated Amount Eligible for Distribution), the First Interim Distribution payment was subtracted from the Estimated Cumulative Distribution Amount. Furthermore, the Refunding Agreement was only modified to reflect the payment of this Estimated Second Interim Distribution. The Refunding Agreement is unchanged in all other respects. As with the First Interim Distribution, you do not have to sign or return the Refunding Agreement. The Refunding Agreement is for your records. Your endorsement, deposit or negotiation of your check for the Estimated Second Interim Distribution in any manner whatsoever constitutes your acceptance of all the terms and conditions of the Refunding Agreement.

Q2: How was the amount of my Estimated Second Interim Distribution determined?

A2: The amount of your Estimated Second Interim Distribution was determined as follows. First, your Submitted Proof of Claim ("POC") Amount was reviewed and multiplied by an Allowable Percentage. In those instances where the POC has been initially adjudicated, the actual adjudication percentage was used as the Allowable Percentage. In those instances where the POC has not been reviewed or is still in the process of being adjudicated, a Default Percentage as more fully described below was used as the Allowable Percentage. The multiplication of your Submitted POC Amount times the Allowable Percentage results in an Estimated Payable Amount. The Estimated Payable Amount is multiplied by two-thirds since the New Jersey Insolvent Health Maintenance Organization Assistance Fund Act of 2000 (the "Act) requires that all providers forgive one-third of their final adjudicated and allowable claim. The resulting sum from this multiplication is reduced by all known Recoverable Amounts To Date. The subtraction of all known Recoverable Amounts To Date from the two-thirds of the Estimated Payable Amount results in the Estimated Amount Eligible for Distribution. (Note: any negative amount calculated at this point in the formula was disqualified from further consideration for this Estimated Second Interim Distribution.) This Estimated Amount Eligible for Distribution is multiplied by 50 percent resulting in the proposed Estimated Cumulative Interim Distribution Amount. The First Interim Distribution Amount is subtracted from this Estimated Cumulative Interim Distribution Amount to determine the Estimated Second Interim Distribution Amount. Finally, a De Minimus Dollar Amount was applied to the Estimated Second Interim Distribution Amount as more fully described below.

ESTIMATED SECOND INTERIM DISTRIBUTION FORMULA OR CALCULATION:

Column A. Submitted POC Amount

Column B. Estimated Percent Allowable

Column C. Estimated Payable Amount (Column A x Column B)

Column D. Two-Thirds of the Estimated Payable Amount (Column C x 2/3)

Column E. Recoverable Amount To Date

Column F. Estimated Amount Eligible for Distribution for Qualifying Claimants (Column D minus Column E)

Column G. Estimated Cumulative Distribution Amount (Column F x 50%)

Column H. Less First Interim Distribution Payment

Column I. Estimated Second Interim Distribution (Column G minus Column H; if Column I is greater than the De Minimus Amounts)

Q3: What are the 3 different categories of providers receiving an Estimated Second Interim Distribution?

A3: The three (3) different categories of providers receiving an Estimated Second Interim Distribution are Ancillaries, Hospitals and Physicians. Ancillaries providers may include such providers as group medical practices, professional medical corporations, dental centers, dentists, eye doctors, chiropractors, nurses, nursing care services, laboratories, medical supply companies, pharmacies and medical transportation services

Q4: Why is the amount of my submitted POC larger than my Estimated Second Interim Distribution payment?

A4: This Estimated Second Interim Distribution is based on submitted POCs that have not been fully adjudicated. Because all of the POCs have not been fully adjudicated, we have continued a conservative approach in determining the amount of this Estimated Second Interim Distribution in order to minimize the risk of overpayment to providers and later having to ask providers to return monies when the POCs are fully adjudicated. Thus, it was determined that a cumulative payment of 50 percent of your Estimated Payable Amount, minus one-third forgiveness and all known Recovery Amounts To Date, would be paid as an Estimated Second Interim Distribution. In addition, the amount of this Estimated Second Interim Distribution will be subject to a De Minimus Dollar Amount as described below.

Q5: Is this Estimated Second Interim Distribution the only monies that I will receive from either HIP or APPP?

A5: This Estimated Second Interim Distribution is an advance or partial payment toward the ultimate amount of your fully adjudicated claim. Sometime later this year, your claim will be fully adjudicated. At that time, you will receive a Notice of Determination ("NOD") from HIP and/or APPP explaining the amount of your claim that is allowable. If you disagree with the amount of your allowable claim, you will have 60 days from the date of the NOD to file an objection with either HIP or APPP and explain why you disagree with your allowable amount. All objections to the NOD must be accompanied by all the supporting documentation upon which you rely for your disagreement with your allowable claim. In the event that you cannot settle your differences with the estate of HIP and/or APPP, you will have the opportunity to present your objection to the liquidation court.

Q6: What are the Default Percentages? Why are the Default Percentages used in HIP so low? Why did APPP use no Default Percentages?

A6: The Default Percentage is the average, by category of provider, of the Estimated Payable Amounts of those POCs that have been initially adjudicated. As stated above, where the POC has not been fully reviewed or adjudicated, the Allowable Percentage used to determine the Estimated Payable Amount is the Default Percentage. In the initial claims adjudication process, the Deputy Liquidators have found that some POCs were filed at normal billing rates, rather than the contracted HMO rate; some POCs were duplicates (POCs filed by both the individual doctor and the group practice for the same service rendered or POCs submitted for service already paid for by the HMO); and some POCs were for services provided to terminated HMO members. These factors, as well as others, have the effect of reducing the Default Percentages used by HIP. Since HIP has not completed its initial review of all its POCs, HIP used a Default Percentage as the Allowable Percentage for those claims not reviewed. Finally, APPP did not use Default Percentages because the estate has initially reviewed all of its POCs and, therefore, is using the actual adjudication percentage as the Allowable Percentage.

Q7: What does Recoverable Amount To Date mean?

A7: Recoverable Amount To Date means those known advance payments made to providers or those amounts paid to providers in error for such items as duplicate payment for the same service provided, payment for service for a terminated member and payment of capitation fees for a terminated member.

Q8: What is the De Minimus Dollar Amount?

A8: The De Minimus Dollar Amount represents the amount below which an Estimated Second Interim Distribution check will not be issued to a provider. The De Minimus Dollar Amount is important for two reasons. First, it prevents HIP and APPP from spending significant money in processing and mailing checks to providers for relatively low dollar amounts. Hence, more money will be available to pay claims to providers when the claims are fully adjudicated. Second, the De Minimus Dollar Amount also minimizes the risk of overpayment to providers and later having to ask providers to return monies when the claims are fully adjudicated. Remember, just because you did not receive any payment in the Estimated Second Interim Distribution does not mean that you will not receive any payment when your claim is fully adjudicated.

Q9: Why are the De Minimus Dollar Amounts different for HIP and APPP?

A9: The De Minimus Dollar Amounts are different to reflect the different stages of HIP and APPP in the initial claims adjudication process. Remember that HIP has substantially more claims to adjudicate than APPP and, therefore, will require more time to fully adjudicate its claims.

Q10: What if I submitted several POCs?

A10: You should not have submitted several POCs for the same service. If you did, the Deputy Liquidators of HIP and APPP will take the necessary steps to avoid paying the same claim twice. In fact, this is one of the factors that affects the value of the Default Percentages.

Q11: May I appeal the amount of this Estimated Second Interim Distribution? May I appeal any of the information (such as the Estimated Adjudicated Amount, Estimated Percentage Allowable or Recoverable Amount To Date) upon which this Estimated Second Interim Distribution is based?

A11: No. As stated above, this Estimated Second Interim Distribution is based, in part, on POCs that are not fully adjudicated. Appealing the amount of this Estimated Second Interim Distribution or any of the information pertaining to this Estimated Second Interim Distribution would significantly delay the final adjudication of your claim and needlessly expend monies that would otherwise be available to pay your fully adjudicated claim. As stated above, once the claims are fully adjudicated, each provider that submitted a POC will receive a NOD from HIP and/or APPP setting forth the amount of the allowable claim. If the provider at that time disagrees with the allowable amount as set forth in the NOD, then the provider may file an appeal with either HIP or APPP within 60 days from the date of the NOD to fully explain why the provider disagrees with the allowable amount. All objections to the NOD must be accompanied by all the supporting documentation upon which you rely for your disagreement with your allowable claim. In the event that you cannot settle your differences with the estate of HIP and/or APPP, you will have the opportunity to present your objection to the liquidation court.

Q12: If I canít appeal the amount of the Estimated Second Interim Distribution or any of the information pertaining thereto (for example the Allowable Percentage or the Recoverable Amounts To Date), what questions or inquiries can I ask of HIP and/or APPP?

A12: You can contact HIP and/or APPP to verify or obtain your POC number, change your address and ascertain why your name is not on any of the lists provided when you believe your name should be listed.

Q13: Will there be further Interim Distributions?

A13: It is unknown at this time whether further Interim Distributions will be necessary. We anticipate that the claims adjudication process for both HIP and APPP will be completed in 2001. If we can meet that timetable and there are sufficient monies in the Fund to pay all adjudicated and allowable claims, then a final distribution through the NOD process described above will be made. A further Interim Distribution may be necessary if the final claims adjudication process takes significantly longer than anticipated.

Q14: In accepting this Estimated Second Interim Distribution payment, will I be forfeiting any of my rights or standing in the liquidation of HIP and/or APPP?

A14: No. As stated above, this Estimated Second Interim Distribution is an advance or partial payment towards the ultimate amount of your fully adjudicated claim. Each provider will have the opportunity to appeal the amount of such providerís fully adjudicated and allowable claim after such provider receives a NOD from HIP and/or APPP. The appeal process was fully described above.

Q15: How long do I have to accept this Estimated Second Interim Distribution payment?

A15: You have sixty (60) days from the date of the check to deposit or cash or otherwise endorse for payment this Estimated Second Interim Distribution payment. After this 60-day period, this Estimated Second Interim Distribution payment will be void.

Q16: What is this Estimated Second Interim Distribution Refunding Agreement? Do I have to do anything with this Refunding Agreement?

A16: Your cashing or depositing of this Estimated Second Interim Distribution payment constitutes your full and unequivocal acceptance to all the terms, conditions and provisions contained in the Estimated Second Interim Distribution Refunding Agreement (the "Refunding Agreement"). As required by the Act, each provider must agree to return all or any portion of any interim or partial payment in the event of overpayment as determined by the final adjudication of such providerís claim. The Refunding Agreement is for your records. You do not have to do anything with this Refunding Agreement (such as sign and return it).

Q17: The Refunding Agreement uses the term "Assignment of Rights." What does that mean?

A17: As required by the Act, each provider that receives payment from the Fund must agree to assign his or her rights to the New Jersey Insolvent Health Maintenance Organization Assistance Association (the "Association") for any potential payments that may be paid from the liquidation estates under the New Jersey Life and Health Insurers Rehabilitation and Liquidation Act (the "LHIRLA"). This allows the Association to assume your place (subrogate) as a Class 3 Priority Claimant under the LHIRLA for monies paid to you from the New Jersey Insolvent Health Maintenance Organization Assistance Fund (the "Fund"). Under the LHIRLA, the Association will wait to be reimbursed from the liquidation estate, if at all, upon the closing of the liquidation estates for monies paid to you from the Fund. In other words, the Association will assume the risk that your fully adjudicated claim may not be paid at all or only partially paid.

Q18: The Refunding Agreement refers to the Associationís Right to Set-Off for multiple claims submitted by related parties. What does this mean?

A18: During the process of adjudicating claims, the Deputy Liquidators of HIP and/or APPP discovered that multiple POCs were submitted for the same service rendered or provided by related parties. The Deputy Liquidators will take the necessary steps to avoid the duplicate payment of claims for the same service rendered or provided. For example, there is a group medical practice (Professional Corporation) consisting of 5 doctors. Both the group medical practice and 1 of the doctors submitted a POC for the same services provided to the member. In this instance, the Deputy Liquidator would try to ascertain which entity (the group medical practice or the doctor) entered into the contractual agreement with the insolvent HMO and pay that adjudicated claim. The other submitted POC would be disregarded as a duplicate POC.

Q19: If a medical billing service completed and submitted my POC, where will my Estimated Second Interim Distribution payment be sent?

A19: Your Estimated Second Interim Distribution payment will be sent to the person/party that filed the POC with the Deputy Liquidator. If you authorized your medical billing service to complete the claim submission on your behalf the distribution will be directed to them unless you have contacted HIP and/or APPP and make the necessary changes to their records.

Q20: May I later decide to participate in future payments from the Fund even if I choose not to accept the Estimated Second Interim Distribution payment?

A20: Yes. You may participate in future payments from the Fund, including any final distribution after your claim is fully adjudicated, even though you chose not to participate in the Estimated Second Interim Distribution.

Q21: What happens if I choose not to accept any payment from the Fund?

A21: In the event that you choose not to participate in any distributions from the Fund, then you will remain a Class 3 Priority Claimant under the LHIRLA. Your claim will be paid from the assets remaining in the liquidation estate, if any and on a pro rata basis, after all Class 1 and Class 2 Priority Claimants have been paid in full. You will have to wait until the liquidation estates are ready to close before you will receive any payment.

Q22: What should I do if my name or address has changed since I filed my POC?

A22: You should immediately contact HIP and/or APPP and make the necessary changes to their records.

Q23: Why is so much detail provided on the Departmentís website regarding this Estimated Second Interim Distribution?

A23: First, since part of the Fund consists of public monies from the New Jersey Treasury, it is appropriate that a full disclosure of all information be made available. Furthermore, this type of information is generally available when an insolvent estate applies to the liquidation court for approval to make a payment to claimants. Second, a full disclosure of all available information may help to reduce the number of phone calls to HIP and/or APPP. Remember, if HIP and/or APPP have to answer numerous telephone calls that could have been answered by a review of the available information, then the final adjudication of claims will be delayed.

Q24: How do I access the Departmentís website?

A24: The Departmentís website is www.state.nj.us/dobi/finreceivership/njihmoaa2.htm.

Q25: How do I contact HIP and/or APPP?

A25: The toll free customer service number for HIP is 800-240-7524.

The toll free customer service number for APPP is 800-982-8347.


Thank you for your anticipated cooperation with this process.