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By Arlene Furlong

Trenton, N.J.—The State of New Jersey Department of Banking and Insurance July 23 filed an administrative order levying $9,457,500 in fines against Aetna Health Inc. for refusing to appropriately cover certain services provided by out-of-network health care providers, including emergency treatment, in violation of New Jersey rules and regulations.

The Department of Banking and Insurance is the state regulatory agency in New Jersey that regulates insurers and third-party administrators.

"It's highly unusual for the Department of Banking and Insurance to receive information and levy a penalty even closely approximating this amount as a result of an investigation," said Art Meisel, executive director of the New Jersey Dental Association. "The fines were imposed based on the complaints the Department received and the answers that Aetna provided during the investigation."

Said Tamra Kempf, ADA chief legal counsel, "A substantial portion of the penalties levied against Aetna by DOBI is for 'not attempting in good faith to effectuate prompt, fair and equitable satisfaction of claims.' According to the order, this accounts for $7,747,500 of the penalties or $2,500 per violation for each of 3,099 violations. As of press time, we had no information on whether or how this affects dental reimbursements. The ADA Legal Division will continue to monitor the outcome of the order through the hearing process."

The New Jersey DOBI received complaints after Aetna issued a June 1 letter to certain health care providers who are not part of Aetna's provider network (out-of-network or nonparticipating providers). The company said it had determined what was fair payment for services rendered by nonparticipating physicians and health care facilities and that "additional reimbursement would not be considered."

Aetna's determination included services by nonparticipating providers that were required under New Jersey law, such as emergency care, services provided by nonparticipating providers during an admission to a network hospital and services rendered as the result of a referral or authorization by Aetna.

The letter stated that Aetna determined that 125 percent of the Medicare allowable amount was fair payment, and 75 percent for lab fees and durable medical equipment. As a result, many patients were subject to receiving bills for the amount Aetna would not pay.

Under such circumstances, New Jersey regulations state that members of a health maintenance organization have the right to "be free from balance billing by providers for medically necessary services."

In mid-June, the New Jersey DOBI asked Aetna several questions about the June 1 letter Aetna sent to health care providers and explained:

"When Aetna approves a member's use of a nonparticipating provider, the member is responsible only for the network level cost sharing and Aetna must pay the nonparticipating provider enough so that he does not balance bill the member. While Aetna may try to negotiate with the nonparticipating provider, ultimately, Aetna has to pay whatever the provider demands such that the member is held harmless. Since the [Aetna] letter states that 'additional reimbursement will not be considered,' the letter is not an initial state of a negotiation but rather a statement that all Aetna will pay is 125 percent of the Medicare allowable amount."

DOBI Commissioner Steven M. Goldman signed the administrative order requiring Aetna to cease its limited reimbursement practice, to reprocess all claims for services rendered by nonparticipating providers adversely affected by Aetna's unfair practices, and make payment to those providers based on the billed amount plus 12 percent interest from the date the claim was initially paid, in addition to the monetary penalty.

Aetna has 30 days to request an administrative hearing objecting to the order and intends to do so, Cynthia Michener, an Aetna spokesperson, told ADA News July 31 in a written statement.

"Aetna is committed to operating in full compliance with applicable law, and we are reviewing the order in detail. We believe that we are not only in compliance with New Jersey statutes, but that our policy protects our members and customers in the State of New Jersey from excessive billed charges by a small group of physicians who do not participate in insurer networks," Ms. Michener's statement said in part. "The vast majority of non-par providers accept our payment and do not balance-bill members. If members are billed, however, we will make them whole such that they're responsible only for the plan's network cost-sharing for covered services."

The medical reimbursement policy in question primarily affects a small subset of physicians based in hospitals, such as anesthesiologists, radiologists and pathologists, who very frequently do not join provider networks even though the hospital in which they work may be part of these networks, Ms. Michener's statement said.