In New Jersey, a special set of regulations governs health plans that can be marketed to small employers in the state. Thomas A. Gentile, a partner at LLP&P who represents WSC, says these regulations were intended to protect small employers and their employees, who lack large employers’ negotiating power and expertise in employee benefits. In 1991, New Jersey’s Legislature passed laws requiring plans marketed to small employers to contain certain basic benefits. The state’s administrative code outlines several different standardized health plans for small employers, which are the only plans that insurance companies can market to these employers. However, regulations allow insurance companies to apply to DOBI for approval of riders to amend a standard plan.
Horizon Blue Cross Blue Shield of New Jersey, the insurer that introduced the plan with the $2,000 cap on services performed at an out-of-network ASC, says it received approval from DOBI for a rider imposing the cap. However, in its case against DOBI, WSC argues DOBI did not follow proper procedure for approving the rider, and even if it had followed proper procedure, such a cap is illegal. For example, the New Jersey Administrative Code states payment for covered services must be based on the 80th percentile of the Ingenix profile and out-of-pocket costs incurred by enrollees for non-network benefits cannot exceed more than $15,000. These regulations would be violated under a plan with a $2,000 cap, according to Mr. Gentile.
DOBI responded that the 1991 New Jersey law (as opposed to the administrative code, which is built upon the law) does not specifically require ASC services to be covered in small employer plans. The law does use the term “hospital” and not “ambulatory surgical center” when outlining services, but Mr. Gentile contends the law was written before ASCs were prevalent, at a time when hospitals were the only location for surgical services. As a result, Mr. Gentile argues the law refers to coverage for the surgery itself and not the location of service.
The Appellate Division of the Superior Court has scheduled oral arguments for April 27.
Mr. Gentile says the ASC plaintiffs brought the case in an attempt to fight back against one of the many moves by insurers to attack out-of-network ASCs in the state of New Jersey.
Contact Lindsey Dunn at lindsey@beckersasc.com.
