January 2006
N.J. revamps utilization management procedures
On January 12, 2006, Governor Codey signed into law S. 2824 which addresses utilization management procedures conducted by insurers in New Jersey. The new law implements the following significant provisions:
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Post-payment audit look-back periods are limited to 18 months (reduced from six years), except in cases of fraud or a pattern of inappropriate billing or claims;
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Insurers must post on the Internet all clinical guidelines used in denying claims and may only use them as a screening tool;
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Utilization management denials must be made by a physician licensed in N.J.;
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Insurers have 15 days to respond to care authorization requests or the request is deemed approved;
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If care is properly preauthorized, an insurer cannot retroactively deny reimbursement absent fraud or misrepresentation;
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An insurer cannot change diagnostic codes without written justification;
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A new binding arbitration system is created for non-medical necessity appeals with attorney’s fee and cost shifting to the prevailing party;
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An insurer can be assessed a $10,000 per day penalty by the Department of Banking and Insurance for violating the act;
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Insurers cannot “extrapolate” data in post-payment audits unless the matter is in a judicial or quasi-judicial arena, altered/reconstructed records or a material number of records are unavailable, or clear evidence of fraud and the matter is referred to the Office of the Insurance Fraud Prosecutor;
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Insurers are permitted to block claim reimbursement to a provider as a result of a post-payment audit.
The law will take effect 180 days from its enactment which will occur on or about July 11, 2006.
Association of New Jersey Chiropractors, www.anjc.info
