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In re Adoption of Amendments To N.J.A.C. 11:22-1.1

Superior Court of New Jersey, Appellate Division

April 29, 2019

IN THE MATTER OF THE ADOPTION OF AMENDMENTS TO N.J.A.C. 11:22-1.1

          Argued March 12, 2019

          On appeal from the New Jersey Department of Banking and Insurance, Agency Docket No. PRN 2017-207.

          Arthur C. Meisel argued the cause for appellants New Jersey Dental Association and Mark Vitale, D.M.D.

          Jeffrey S. Posta, Deputy Attorney General, argued the cause for respondent New Jersey Department of Banking and Insurance (Gurbir S. Grewal, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Jeffrey S. Posta, on the brief).

          Before Judges Yannotti, Rothstadt and Gilson.

          OPINION

          YANNOTTI, P.J.A.D.

         Mark Vitale, D.M.D., and the New Jersey Dental Association (NJDA) appeal from the adoption of administrative rules by the New Jersey Department of Banking and Insurance (Department) implementing the Health Claims Authorization, Processing and Payment Act (HCAPPA). L. 2005, c. 352 (codified as amended in various sections of titles 17, 17B, and 26 of the New Jersey Statutes Annotated). We affirm.

         I.

         We begin our consideration of the appeal with a brief summary of the history of HCAPPA. The Health Information Electronic Interchange Technology Act (the HINT Act) was enacted in 1999. L. 1999, c. 154 (codified as amended in various sections of titles 17, 17B, 26, and 45 of the New Jersey Statutes Annotated). The HINT Act provided for, among other things, the electronic receipt, transmission, and prompt payment of claims for health and dental benefits. Ibid.

         HCAPPA amended certain provisions of the HINT Act, and added substantially-identical statutes that permit health service corporations, group health insurers, hospital service corporations, medical service corporations, individual health insurers, health maintenance organizations, and prepaid prescription service organizations to obtain reimbursement of overpayments of claims, subject to certain conditions and criteria. The reimbursement provisions state:

(10) With the exception of claims that were submitted fraudulently or submitted by health care providers that have a pattern of inappropriate billing or claims that were subject to coordination of benefits, no payer shall seek reimbursement for overpayment of a claim previously paid pursuant to this section later than [eighteen] months after the date the first payment on the claim was made. No payer shall seek more than one reimbursement for overpayment of a particular claim. At the time the reimbursement request is submitted to the health care provider, the payer shall provide written documentation that identifies the error made by the payer in the processing or payment of the claim that justifies the reimbursement request. . . . .
(11)(a) In seeking reimbursement for the overpayment from the health care provider, except as provided for in subparagraph (b) of this paragraph, no payer shall collect or attempt to collect: (i) the funds for the reimbursement on or before the [forty-fifth] calendar day following the submission of the reimbursement request to the health care provider; (ii) the funds for the reimbursement if the health care provider disputes the request and initiates an appeal on or before the [forty-fifth] calendar day following the submission of the reimbursement request to the health care provider and until the health care provider's rights to appeal set forth under paragraphs (1) and (2) of subsection e. of this section are exhausted; or (iii) a monetary penalty against the reimbursement request, including but not limited to, an interest charge or a late fee. The payer may collect the funds for the reimbursement request by assessing them against payment of any future claims submitted by the health care provider after the [forty-fifth] calendar day following the submission of the reimbursement request to the health care provider or after the health care provider's rights to appeal set forth under paragraphs (1) and (2) of subsection e. of this section have been exhausted if the payer submits an explanation in writing to the provider in sufficient detail so that the provider can reconcile each covered person's bill.
[N.J.S.A. 17:48E-10.1(d) (health service corporations); N.J.S.A. 17B:27-44.2(d) (group health insurance companies); N.J.S.A. 17:48-8.4(d) (hospital service corporations); N.J.S.A. 17:48A-7.12(d) (medical service corporations); N.J.S.A. 17B:26-9.1(d) (individual health insurers); N.J.S.A. 26:2J-8.1(d) (health maintenance organizations); N.J.S.A. 17:48F-13.1(d) (prepaid prescription service organizations).]

         In 2017, the Department issued a notice stating that it intended to adopt amendments to the rule governing the prompt payment of health and dental claims, and adopt new rules addressing, among other things, the reimbursement by payers of claim overpayments. See 49 N.J.R. 2729(a) (proposed Aug. 21, 2017). One of the proposed rules stated in relevant part that a "health carrier or its agent may offset" any overpayment "against a provider's future insured claims," subject to certain conditions. Ibid. (later codified at N.J.A.C. 11:22-1.8(b)(5)).

         On October 17, 2017, Dr. Vitale and the NJDA submitted comments to the rule proposal. They asserted that the reimbursement provisions of HCAPPA only apply to health benefits plans and do not permit payers to obtain reimbursements of overpayments of claims paid under "stand-alone" or "dental-only" plans. Dr. Vitale and the NJDA also asserted that the Department should confirm that the word "offset" used in the proposed regulation has the same meaning as "setoff" under New Jersey law. They argued that the payer could not apply a "setoff" to a provider's future claims for patients other than the patient for whom the overpayment was made.

         The Department responded to these comments when it issued its notice of rule adoption. See 50 N.J.R. 829(a) (Feb. 5, 2018). The Department stated that the suggested change in the proposed rule governing reimbursement of overpayments is not required. The Department noted that the reimbursement provisions apply to health carriers, which as defined under HCAPPA do not include dental service corporations or dental plan organizations.

         The Department concluded, however, that health carriers could nevertheless obtain reimbursements of any overpayments they may have made on claims, including claims submitted under "stand-alone" or "dental-only" plans. The Department stated that HCAPPA's reimbursement provisions "are based ...


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