Assembly panel weighs new oversight of health insurance claims

Hospitals say the planned new oversight would relieve strain on doctors, but insurers say the program is unworkable and, in part, needless. (Dana DiFilippo | New Jersey Monitor)

The Assembly Financial Institutions and Insurance Committee took testimony Thursday on a new bill that would expand oversight of claims denied by health insurance companies.

The bill would require health insurers to submit a range of information about their claims, including the number received, the number denied and appealed, the amount rejected during the prior authorization process, the most frequently denied specialty, and other data requested by the Department of Banking and Insurance.

Insurers found to have no justification for at least 20% of their denied claims would be required to reimburse customers for 100% of what they paid for services that were denied coverage.

Proponents from the New Jersey Hospital Association told the panel the enhanced oversight would relieve strain on health care providers by reducing improper denials.

“When care is denied, often it requires a clinician’s time and attention to help with that appeal, and so again, as we have workforce shortages, we’re pulling those clinicians away from patient care to sort of manage the bureaucracy and paperwork related to that care,” said Christine Stearns, chief government relations officer for the group.

Insurers were less keen on the bill, which was posted for discussion only and did not see a vote. They warned it is unclear who would determine how many of an insurance carrier’s denials were unjustified or how they would do so.

“I’m not sure … who’s going to make that determination as to what’s not been justified, and in many cases, the system does have a remedy that if you appeal, it goes to an outside reviewer,” said Ward Sanders, president of the New Jersey Association of Health Plans.

The sheer volume of claims could make the proposal impractical, Sanders added.

He said the penalties for insurers who unjustly deny too many claims could be inconsistent with the severity of the error and could draw objections from the Centers for Medicare and Medicaid Services.

Assemblyman Bob Auth (R-Bergen) worried the penalties would be passed along to consumers as higher costs.

Assemblyman Roy Freiman (D-Somerset), who chairs the committee, said he believes the bill is meant to identify a pattern of improper denials and added the existing process to appeal denied claims is too cumbersome for many.

“Anyone who’s actually gone through that process, I think you’d rather smack your thumb with a hammer because it is not one that facilitates and recognizes that someone is really trying to get this reviewed,” he said. “It’s a multi-step process. It ultimately does end up with a third party looking at it, but I’m not sure it’s designed to be patient-centric.”

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