New Jersey Administrative Code › Title 11 - INSURANCE › Chapter 24B - ORGANIZED DELIVERY SYSTEMS › Appendix - APPENDIX › Exhibit 9

Current through Register Vol. 56, No. 14, July 15, 2024
Organized Delivery Systems Examples
Example 1
Nature of Services
Carrier contracts with Contractor to provide and/or arrange for the provision of certain mental health and substance abuse services to individuals covered by the Carrier's benefit plans.
Method of Payment
Carrier pays Contractor an administrative fee on a per Member Per Month basis. The Carrier is responsible for depositing amounts to pay for mental health and substance abuse services into a bank account designated by a claims administrator. The carrier is responsible for adequately funding the account, which will be used to pay claims for services received by covered persons. Providers are paid on a fee for service basis.
Determination
The Contractor is an Organized Delivery System providing limited health care services. However, the Contractor receives only an administrative fee and the Carrier is responsible for all claim costs, the Contractor does not assume financial risk. Therefore, the Contractor must apply to the Department of Banking and Insurance for Certification as an Organized Delivery System.
Example 2
Nature of Services
Carrier contracts with Contractor to provide and/or arrange for the provision of certain mental health and substance abuse services to individuals covered by the Carrier's benefit plans.
Method of Payment
Carrier pays Contractor an administrative fee on a Per Member Per Month basis subject to adjustments based on a comparison of actual claim costs to target claim costs. The Carrier is responsible for depositing amounts to pay for mental health and substance abuse services into a bank account designated by an administrator. Such funds are used to pay claims for services received by covered persons. Providers are paid on a fee for service basis.
Determination
The Contractor is an Organized Delivery System providing limited health care services. Because the Contractor shares the risk for claim costs through adjustments to the administrative fee, the Contractor does assume financial risk. Therefore, the Contractor must apply to the Department of Banking and Insurance either for licensure as an Organized Delivery System or, upon demonstration that the risk is de minimis, exemption from licensure. If the Department of Banking and Insurance agrees that the risk is de minimis, the Contractor will be required to obtain Certification as an Organized Delivery System from the Department of Banking and Insurance.
Example 3
Nature of Services
Carrier contracts with a physician hospital organization ("PHO") for comprehensive health care services. The PHO contracts with hospitals and physicians to provide a network for delivery of services. In some cases the PHO does not contract directly with physicians, but instead contracts with individual practice associations ("IPA"), which in turn contract with physicians other than its shareholders to provide services.
Method of Payment
Carrier pays the PHO a Per Member Per Month fee. The PHO reimburses the hospitals on a reduced fee for service basis or on a case rate basis. Generally, the physicians are paid on a capitation basis; however, specialists are reimbursed on a reduced fee for service basis. The IPAs, which are paid a Per Member Per Month fee, pay physicians on a capitation basis, and also reimburse specialists on a reduced fee for service basis.
Determination
The PHO is an Organized Delivery System providing comprehensive health care services and assuming financial risk. Therefore, the PHO must apply to the Department of Banking and Insurance either for licensure as an Organized Delivery System or, upon demonstration that the risk is de minimis, exemption from licensure. The IPAs, which indirectly provide a network of providers to the carrier, are also risk assuming and must apply either for licensure as Organized Delivery Systems or, upon demonstration that the risk is de minimis, exemption from licensure. If an exemption is granted by the Department of Banking and Insurance, then certification from the Department of Banking and Insurance must be sought.