Assignment of Benefits Bill Passes the Legislature

MSNJ urges Governor to sign A-132

Legislation requiring health insurers to remit a patient’s reimbursement directly to an out-of-network provider has passed the Senate, just days after passing the Assembly and a week after clearing its biggest hurdle before the Assembly Financial Institutions and Insurance Committee.

This legislation, which has been one of the most hotly debated healthcare issues in the concluding weeks of the 2008-2009 legislative session, would require insurers to honor a patient’s “assignment of benefits” to an out-of-network provider by sending payment directly to physicians.  Currently, honoring assignment is optional, and many payers continue to send checks to consumers leaving the opportunity for the check to not reach the physician.

The bill, which had sailed through the Senate in 2008, stalled in Assembly committee as policy makers debated the appropriateness of insurers using the “assignment issue” as a tool to encourage network participation.  The Assembly eventually settled on a compromise which mandates direct payment while giving insurers the option of requiring two signatures—the provider’s and the patient’s—on the check.  The compromise preserved some difference in payment between participating and out-of-network providers, while assuring that physicians have better control over their billings.

In it’s final form, A-132, the “Assignment of Benefits” bill:

  1. Guarantees that insurance payments will be mailed directly to physicians regardless of their network participation;
  2. Assures checks from health insurers can only be used to pay healthcare providers; and,
  3. Puts doctors in the driver’s seat by assuring that they are aware of when checks are cut, mailed, and signed by the appropriate party.

MSNJ joins the Hospital Association and countless other medical specialty societies in celebration of this tremendous success, and thanks all of our coalition partners for their hard work.

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3 responses to “Assignment of Benefits Bill Passes the Legislature”

  1. CATHY GIBLIN says :

    When will this bill take effect if signed by the Governor? Please comment

  2. Vadim Gritsus, M.D. says :

    We are extremely interested in the updates regarding this matter. We continue to struggle with payments that are issued to our patients instead of being issued directly to our office for our services and the services of our Assistant Surgeons.

    Please update us with any new information you may have to share about this and also as to whether or not this bill has passed all necessary levels so that we may implement this information with our Insurance Carriers.

    Thank you.

    • MSNJ says :

      Thanks for your message. We have heard from many practices regarding the continuing practice by some carriers to remit payments directly to patients even where there is a bona fide assignment of the benefit made by the patient. If the patient is under a self insured plan our state law does not apply to those claims.

      It is important to understand who actually insures the patient. NJ is home to many fortune 500 companies and large labor organizations that self-insure their employee’s health benefits. These self-insured plans are governed by federal ERISA law.

      Companies that self insure health benefits typically hire a company to “administer” those plans (These are called Third Party Administrators also known as TPA’s). Large insurers such as Horizon or United Healthcare may serve as TPA’s. The TPA may issue cards to patients with their company logos attached so a medical office might believe the patient is “insured” by Horizon or United, when in reality those companies are simply service providers to the large employer, union, or local government. So how can you tell whether a patient presenting a Horizon card at your office is covered by Horizon or covered under a self insured plan?

      MSNJ was active in the regulatory arena and supported regulations that require plans to identify on the insurance card what entity is actually insuring the risk so medical offices can understand when an assignment of benefits must be honored. We will post a copy of a new card showing where you can look for the information. Stay tuned!

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