N.J. Admin. Code § 11:24-2.6

Current through Register Vol. 57, No. 1, January 6, 2025

Section 11:24-2.6 - Amendment to an approved certificate of authority

(a) After issuance of a certificate of authority, any HMO which proposes to expand or reduce its service area, change the operational model of its health care delivery system, subcontract its complaint and appeal process, quality improvement, utilization management functions, credentialing, marketing, claims processing, or network management, engage in a transaction that results in any person having ownership of 10 percent or greater control of the HMO, or initiate a contract with Medicaid and/or Medicare shall be subject to the approval of the Commissioner for an amendment to the HMO's certificate of authority. Actions that shall require an amendment include, but are not limited to:

1. A change in the operational model of the health care delivery system, including, but not limited to:

i. A group model converting to or adding an individual practice association (IPA); or

ii. An IPA model converting to or adding a group model, including establishment of the initial health center in any service area.

2. A change in the service area or sub-area, including adding or deleting a county or counties or sub-areas of a county (by zip code area); or

3. A change in the enrollment of the HMO to include Medicaid or Medicare recipients.

(b) For purposes of this section, the following words and terms shall have the following meanings:

"Group model" means the HMO organizational model in which the HMO contracts with health care providers to serve only its members in a health center(s) owned or leased by the HMO.

"Individual practice association (IPA) model" means the HMO organizational model in which the HMO contracts with health care providers to serve its enrollees in their private offices.

(c) The HMO shall apply to the Department to amend the certificate of authority and shall submit complete supporting documentation at least 60 business days prior to the planned implementation of the change. If the HMO is expanding its enrollment to include Medicaid enrollees, the HMO shall also submit a copy of the application to the Department of Human Services.

(d) Neither HMOs nor carriers shall restrict utilization of any HMO's network or offer any alternative or substitute network of providers, whether or not the providers are or are not within an approved network of the HMO or carrier (for the purpose of offering rate differentials or for any other purpose) until the network restriction or alternative or substitute network is approved by the Department as a stand-alone secondary network adequate for the purposes intended.

1. HMOs shall submit requests for approval of secondary networks, and shall clearly identify the purpose of every secondary network. An application for modification of a certificate of authority shall include the following:

i. A specimen copy of every form of a contract between the HMO and all providers to be included in the secondary network, with a statement as to whether the contract was previously approved for use with the HMO's standard network;

ii. A specimen copy of the form of the individual and group contract and evidence of coverage, if any, which is to be issued to employers, unions, trustees or other organizations pursuant to utilization of the secondary network, with a statement as to whether the contract was previously approved for use with the HMO's standard network;

iii. A description of the proposed method of marketing and financing of the secondary network;

iv. A description and map of the geographic area to be served by the secondary network identified by county or zip codes, if sub-areas of counties are to be proposed as boundaries of the service area;

v. Enrollment projections presented on a quarterly basis for the first three years of operation for each county or sub-area proposed as the service area, including a description of the demographic characteristics of the population by at least gender and age;

vi. A list of providers under the proposed secondary network by county, municipality and zip code, accompanied by maps of the service area identifying the location of these providers, specialists, hospitals and ancillary providers, if any, including the name, address and hospital affiliation of every provider, as applicable;

vii. The proposed rates for the secondary network; and

viii. Such other information as the Commissioner may require of a specific applicant to determine that a modification of the certificate of authority is appropriate.

2. The Commissioner shall approve an amendment for a secondary network based upon a determination that the secondary network is adequate to serve the purposes intended, as specified by the HMO, with respect to availability of services, product design (including integration with other networks established by the HMO, if integration will or may occur) and financial stability of the HMO. In making this determination, the criteria that apply to establishment of any network by an HMO shall apply to establishment of a secondary network.

(e) In reviewing the proposed amendment to a certificate of authority, the Commissioner shall determine whether the HMO has demonstrated compliance with all applicable rules of this chapter. The Commissioners shall also examine and evaluate the compliance record of the HMO for the period beginning 12 months prior to receipt of written notice, and may deny such application for a finding of non-compliance leading to an enforcement action pursuant to N.J.A.C. 11:24-2.1 3.

(f) If the amendment to the certificate of authority is for the purpose of expanding the HMO's enrollment to include Medicaid enrollees, the amendment shall not be approved until such time that the Commissioner has received and considered the recommendation of the Department of Human Services, Division of Medical Assistance and Health Services on the HMO's compliance with the State and Federal requirements of execution of a contract between the HMO and the Department of Human Services.

N.J. Admin. Code § 11:24-2.6

Amended by R.2000 d.183, effective 5/1/2000.
See: 31 N.J.R. 953(a), 32 N.J.R. 1544(a).
In (a), rewrote the introductory paragraph, and substituted "of" for "or" in 2; inserted a new (d); and recodified former (d) and (e) as (e) and (f).