New Jersey-2024-A5132-Introduced

An Act concerning NJ FamilyCare and clinical laboratory services and supplementing and amending Title 30 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) Section 1 through 5 of this act shall be known as and may be cited as the "Clinical Laboratory Services Reimbursement and Vulnerable Patient Discount Act."

2. (New section) As used in sections 3 through 5 of act:

"Division" means the Division of Medical Assistance and Health Services in the Department of Human Services.

"Laboratory" means the same as that term is defined at 42 CFR s.493.2.

"Financial hardship" means a substantial inability to meet basic living expenses due to a lack of sufficient financial resources demonstrated by: (i) gross household income which does not exceed 200 percent of the federal poverty level, or is otherwise insufficient to cover necessary costs of housing, food, utilities, transportation, and medical expenses; or (ii) exceptional and unforeseen expenses that substantially impair a patient's financial stability.

"NJ FamilyCare" means the program established pursuant to P.L.2005, c.156 (C.30:4J-8 et al.), which includes the Medicaid Program and the Children's Health Insurance Program.

3. (New Section) The Legislature finds and declares that:

a. There is growing concern across the State that the current basis for reimbursement for laboratory services under NJ FamilyCare has the effect of impeding access to care for uninsured, underinsured, underserved, or otherwise vulnerable recipients of those services. As laboratories play a critical role in providing urine toxicology testing for patients who suffer from substance use disorders, it is essential that the Legislature address the negative consequences of this existing policy.

b. Currently, pursuant to N.J.A.C.10:61-1.7, charges submitted to NJ Family Care for laboratory services are required to reflect the service provider's lowest professional charge, and under no circumstances is the charge to exceed the provider's charge for identical services to other groups or individuals.

c. Under this policy, when a laboratory charges an uninsured patient, that patient's treating provider, or another requester of laboratory testing a lower price for a drug screen than the amount charged to NJ FamilyCare, the laboratory must reduce its charges under NJ FamilyCare with respect to all contemporaneous and future claims for that test, notwithstanding that the NJ FamilyCare fee schedule provides for a higher reimbursement amount for such test. All amounts received by the laboratory from NJ FamilyCare in excess of the discounted rate, dating back to the first instance in which the laboratory accepted the discounted rate, is considered a violation of current regulations and an overpayment by NJ FamilyCare to the laboratory.

d. Notably, the current NJ FamilyCare reimbursement policy requires a laboratory to avail NJ FamilyCare of the same pricing the laboratory offers to all patients, including those who are uninsured, underinsured, underserved, or otherwise facing financial hardships.

e. A laboratory in violation the current NJ FamilyCare reimbursement policy would additionally be non-compliant with the State's existing anti-rebate regulation as, pursuant to N.J.A.C.10:61-2.4, a discount to a patient, that patient's treating provider, or another requester of laboratory testing is considered a rebate.

f. A proliferation of recent enforcement activity regarding violations of the current NJ FamilyCare reimbursement policy and anti-rebate regulation focused on laboratory services provided to uninsured, underinsured, and underserved patients raises serious concern that laboratories will cease offering discounted charges to vulnerable patients. The populations in jeopardy of losing access to critical services include patients who are: homeless; experiencing financial hardship; in extreme poverty; wholly uninsured; awaiting determination of Medicaid enrollment; required to complete testing to access certain levels of care at substance use disorder treatment facilities; involved in the New Jersey Drug Court program; newly released inmates who must comply with court-ordered testing; clinically diagnosed with substance use disorders and who require routine drug testing within a Division of Mental Health and Addiction Services licensed facility; and required to receive laboratory services in connection with a legal mandate, with a State-funded program, or with testing ordered by New Jersey Division of Child Protection and Permanency.

g. Accordingly, it is in the public interest to afford latitude to providers of laboratory services to modify their charges to uninsured, underinsured, underserved, or otherwise vulnerable patients as necessary without risking enforcement action due to violation of the NJ FamilyCare reimbursement and anti-rebate prohibition regulations.

h. It is necessary and proper that the Legislature permit a laboratory to discount its charges to uninsured, underinsured, underserved, or otherwise vulnerable patients, their treating providers, and other requesters of laboratory testing based on the financial hardship of the patient.

4. (New Section) a. Notwithstanding the provisions of N.J.A.C.10:61-1.7 to the contrary, reimbursement for items or services provided by a laboratory under NJ FamilyCare shall be in an amount equal to the lesser of: the amount specified in the maximum fee schedule set forth at N.J.A.C.10:61-3, a fee schedule subsequently established by the division, or the laboratory's usual charge for the identical item or service when provided to the general public by the laboratory.

b. Any discount offered by a laboratory to any individual or group shall be deemed permissible as long as it is consistent with the provisions of 42 U.S.C s.1320a-7b(b) or regulations promulgated thereunder.

c. Notwithstanding the provisions of subsection a. and subsection b. of this section, a laboratory receiving reimbursement under NJ FamilyCare may charge or accept a lesser amount for an item or service from a non-NJ FamilyCare enrollee, based on the demonstrated financial hardship of an individual:

(1) without affecting the reimbursement amount under NJ FamilyCare for the same or substantially similar item or service; or

(2) without constituting a violation of N.J.A.C.10:61-2.4.

d. To demonstrate financial hardship, a patient may provide the provider: (i) proof of actual gross income (a) from the 12 months immediately preceding the services; (b) for the three months immediately preceding the services; or (c) for the month immediately preceding the services; (ii) recent documentation of exceptional circumstances that substantially impair the patient's ability to pay for the services; or (iii) other evidence that the provider determines supports a finding of financial hardship.

5. (New Section) On the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill):

a. all pending audits, investigations, recoupments, or actions initiated by the division under NJ FamilyCare regarding conduct by a laboratory considered in violation of the provisions of N.J.A.C.10:61-1.7 or N.J.A.C.10:61-2.4, either alone or in combination with each other, which actions are subsequently permissible under section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be expeditiously dismissed; and

b. all reports, decisions, actions, judgements, certificates of debt, or levies initiated by the division under NJ FamilyCare that occurred prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) due to conduct by a laboratory considered in violation of the provisions of N.J.A.C.10:61-1.7 or N.J.A.C.10:61-2.4, either alone or in combination with each other, which actions are subsequently permissible under section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be vacated by operation of law and expunged from the administrative record.

6. Section 17 of P.L.1968, c.413 (C.30:4D-17) is amended to read as follows:

17. (a) Any person who willfully obtains benefits under P.L.1968, c.413 (C.30:4D-1 et seq.) to which a person is not entitled or in a greater amount than that to which a person is entitled and any provider who willfully receives medical assistance payments to which a provider is not entitled or in a greater amount than that to which a provider is entitled is guilty of a crime of the third degree, provided, however, that the presumption of nonimprisonment set forth in subsection e. of N.J.S.2C:44-1 for persons who have not previously been convicted of an offense shall not apply to a person who is convicted under the provisions of this subsection.

(b) Any provider, or any person, firm, partnership, corporation, or entity, who:

(1) Knowingly and willfully makes or causes to be made any false statement or representation of a material fact in any cost study, claim form, or any document necessary to apply for or receive any benefit or payment under P.L.1968, c.413; or

(2) At any time knowingly and willfully makes or causes to be made any false statement, written or oral, of a material fact for use in determining rights to such benefit or payment under P.L.1968, c.413; or

(3) Conceals or fails to disclose the occurrence of an event which

(i) affects a person's initial or continued right to any such benefit or payment, or

(ii) affects the initial or continued right to any such benefit or payment of any provider or any person, firm, partnership, corporation, or other entity in whose behalf a person has applied for or is receiving such benefit or payment with an intent to fraudulently secure benefits or payments not authorized under P.L.1968, c.413 or in a greater amount than that which is authorized under P.L.1968, c.413; or

(4) Knowingly and willfully converts benefits or payments or any part thereof received for the use and benefit of any provider or any person, firm, partnership, corporation, or other entity to a use other than the use and benefit of such provider or such person, firm, partnership, corporation, or entity; is guilty of a crime of the third degree, provided, however, that the presumption of nonimprisonment set forth in subsection e. of N.J.S.2C:44-1 for persons who have not previously been convicted of an offense shall not apply to a person who is convicted under the provisions of this subsection.

(c) Any provider, or any person, firm, partnership, corporation, or entity who solicits, offers, or receives any kickback, rebate, or bribe in connection with:

(1) The furnishing of items or services for which payment is or may be made in whole or in part under P.L.1968, c.413; or

(2) The furnishing of items or services whose cost is or may be reported in whole or in part in order to obtain benefits or payments under P.L.1968, c.413; or

(3) The receipt of any benefit or payment under this act, is guilty of a crime of the third degree, provided, however, that the presumption of nonimprisonment set forth in subsection e. of N.J.S.2C:44-1 for persons who have not previously been convicted of an offense shall not apply to a person who is convicted under the provisions of this subsection.

This subsection shall not apply to (A) a discount or other reduction in price under P.L.1968, c.413 if the reduction in price is properly disclosed and appropriately reflected in the costs claimed or charges made under P.L.1968, c.413; [and] (B) any amount paid by an employer to an employee who has a bona fide employment relationship with such employer for employment in the provision of covered items or services; and (C) any discount offered, or amount charged or accepted, by a laboratory in compliance with section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

(d) Whoever knowingly and willfully makes or causes to be made or induces or seeks to induce the making of any false statement or representation of a material fact with respect to the conditions or operations of any institution or facility in order that such institution or facility may qualify either upon initial certification or recertification as a hospital, skilled nursing facility, intermediate care facility, or health agency, thereby entitling them to receive payments under P.L.1968, c.413, shall be guilty of a crime of the fourth degree.

(e) Any person, firm, corporation, partnership, or other legal entity who violates the provisions of any of the foregoing subsections of this section or any provisions of section 3 of P.L.2007, c.265 (C.2A:32C-3), shall, in addition to any other penalties provided by law, be liable to civil penalties of: (1) payment of interest on the amount of the excess benefits or payments at the maximum legal rate in effect on the date the payment was made to said person, firm, corporation, partnership or other legal entity for the period from the date upon which payment was made to the date upon which repayment is made to the State; (2) payment of an amount not to exceed three-fold the amount of such excess benefits or payments; and (3) payment in the sum of not less than and not more than the civil penalty allowed under the federal False Claims Act (31 U.S.C. s.3729 et seq.), as it may be adjusted for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, Pub.L.101-410 for each excessive claim for assistance, benefits or payments.

(f) Any person, firm, corporation, partnership, or other legal entity, other than an individual recipient of medical services reimbursable by the Division of Medical Assistance and Health Services, who, without intent to violate P.L.1968, c.413, obtains medical assistance or other benefits or payments under P.L.1968, c.413 in excess of the amount to which he is entitled, shall be liable to a civil penalty of payment of interest on the amount of the excess benefits or payments at the maximum legal rate in effect on the date the benefit or payment was made to said person, firm, corporation, partnership, or other legal entity for the period from September 15, 1976 or the date upon which payment was made, whichever is later, to the date upon which repayment is made to the State, provided, however, that no such person, firm, corporation, partnership, or other legal entity shall be liable to such civil penalty when excess medical assistance or other benefits or payments under this act are obtained by such person, firm, corporation, partnership, or other legal entity as a result of error made by the Division of Medical Assistance and Health Services, as determined by said division; provided, further, that if preliminary notification of an overpayment is not given to a provider by the division within 180 days after completion of the field audit as defined by regulation, no interest shall accrue during the period beginning 180 days after completion of the field audit and ending on the date preliminary notification is given to the provider.

(g) All interest and civil penalties provided for in P.L.1968, c.413 and all medical assistance and other benefits to which a person, firm, corporation, partnership, or other legal entity was not entitled shall be recovered in an administrative proceeding held pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), except that recovery actions against minors or incapacitated persons shall be initiated in a court of competent jurisdiction.

(h) Upon the failure of any person, firm, corporation, partnership, or other legal entity to comply within 10 days after service of any order of the director or the director's designee directing payment of any amount found to be due pursuant to subsection (g) of this section, or at any time prior to any final agency adjudication not involving a recipient or former recipient of benefits under P.L.1968, c.413, the director may issue a certificate to the clerk of the Superior Court that such person, firm, corporation, partnership, or other legal entity is indebted to the State for the payment of the amount. A copy of such certificate shall be served upon the person, firm, corporation, partnership, or other legal entity against whom the order was entered. Thereupon the clerk shall immediately enter upon the record of docketed judgments the name of the person, firm, corporation, partnership, or other legal entity so indebted, and of the State, a designation of the statute under which such amount is found to be due, the amount due, and the date of the certification. Such entry shall have the same force and effect as the entry of a docketed judgment in the Superior Court. Such entry, however, shall be without prejudice to the right of appeal to the Appellate Division of the Superior Court from the final order of the director or the director's designee.

(i) In order to satisfy any recovery claim asserted against a provider under this section, whether or not that claim has been the subject of final agency adjudication, the division or its fiscal agents is authorized to withhold funds otherwise payable under P.L.1968, c.413 to the provider.

(j) The Attorney General may, when requested by the commissioner or the commissioner's agent, apply ex parte to the Superior Court to compel any party to comply forthwith with a subpoena issued under P.L.1968, c.413. Any party who, having been served with a subpoena issued pursuant to the provisions of P.L.1968, c.413, fails either to attend any hearing, or to appear or be examined, to answer any question or to produce any books, records, accounts, papers or documents, shall be liable to a penalty of $500 for each such failure, to be recovered in the name of the State in a summary civil proceeding to be initiated in the Superior Court. The Attorney General shall prosecute the actions for the recovery of the penalty prescribed in this section when requested to do so by the commissioner or the commissioner's agent and when, in the judgment of the Attorney General, the facts and law warrant such prosecution. Such failure on the part of the party shall be punishable as contempt of court by the court in the same manner as like failure is punishable in an action pending in the court when the matter is brought before the court by motion filed by the Attorney General and supported by affidavit stating the circumstances.

(k) Notwithstanding the provisions of N.J.S.2C:43-3 to the contrary, but in addition to any other penalty or disposition that may be imposed by law:

(1) a person who violates the provisions of subsection (a), (b), or (c) of this section shall be liable to a penalty of not less than $15,000 and not more than $25,000 for each violation; and

(2) a person who violates the provisions of subsection (d) of this section shall be liable to a penalty of not less than $10,000 and not more than $25,000 for each violation.

(l) A person who violates the provisions of subsection (a), (b), or (c) of this section under circumstances in which the aggregate amount obtained or sought to be obtained is $1,000 or more, who has previously been convicted of a violation of the provisions of subsection (a), (b), or (c) of this section within 10 years of the current violation, under circumstances where the aggregate amount obtained or sought to be obtained was $1,000 or more, is guilty of a crime of the second degree and, in addition to any other penalty or disposition authorized by law and notwithstanding the provisions of N.J.S.2C:43-3 to the contrary, shall be liable to a penalty of not less than $25,000 and not more than $150,000 for each such repeat violation.

(cf: P.L.2013, c.103, s.88)

7. (New Section)The Department of Human Services, in consultation as necessary with other State agencies, shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as necessary to effectuate the purposes of this act.

8. This act shall take effect immediately.

STATEMENT

This bill establishes the "Clinical Laboratory Services Reimbursement and Vulnerable Patient Discount Act," which permits clinical laboratories to provide certain patients with discounts without affecting NJ FamilyCare reimbursement rates or violating NJ FamilyCare rebate prohibitions. N.J.A.C.10:61-1.7 provides that under no circumstances is a clinical laboratory allowed to charge the NJ Family program an amount that exceeds the provider's charge for identical services to other groups or individuals. Moreover, a clinical laboratory in violation of this current NJ FamilyCare reimbursement policy would additionally be non-compliant with the existing anti-rebate regulation as, pursuant to N.J.A.C.10:61-2.4, a discount to a patient is considered a rebate. It is the sponsor's belief that these regulations, in combination, have the effect of impeding access to care for uninsured, underinsured, or underserved individuals by forcing clinical laboratories to stop offering discounted charges to these vulnerable patients. The provisions of this bill are designed to reverse these consequences.

Under the bill, notwithstanding the provisions of N.J.A.C.10:61-1.7 to the contrary, reimbursement for items or services provided by a clinical laboratory under NJ FamilyCare are required to be in an amount equal to the lesser of: the amount specified in the maximum fee schedule set forth in existing regulation or future policy; or the clinical laboratory's usual charge for the identical item or service when provided to the general public. Any discount offered by a clinical laboratory is to be deemed permissible as long as it is consistent with federal law and regulation. Moreover, a clinical laboratory may charge or accept a lesser amount than the amount charged to NJ FamilyCare for an item or service, based on the financial hardship of an individual: (1) without affecting the reimbursement amount under NJ FamilyCare for the same or substantially similar item or service; or (2) without constituting a violation of N.J.A.C.10:61-2.4.

Additionally, upon the effective date of the bill, all pending or existing actions initiated by the Division of Medical Assistance and Health Services in the Department of Human Services under NJ FamilyCare regarding conduct by a clinical laboratory considered in violation of the provisions of N.J.A.C.10:61-1.7 or N.J.A.C.10:61-2.4, either alone or in combination with each other, which actions are subsequently permissible under the bill, are to be dismissed or vacated.

Finally, the bill provides that any discount offered, or amount charged or accepted, by a clinical laboratory in compliance with the bill's provision are not to be subject to penalties under section 17 of P.L.1968, c.413 (C.30:4D-17). This State law, among other things, establishes that it is a crime of the third degree when a Medicaid provider willfully receives medical assistance payments in a greater amount than that to which a provider is entitled.