New Jersey's Hint Bill Advances Administrative Simplification

The State of New Jersey has enacted S-323, legislation intended to promote and standardize electronic data interchanges ("EDI") in healthcare claims transactions. The legislation is based upon recommendations first made in a study of Healthcare Information Networks and Technologies ("HINT") by Thomas Edison State College. The HINT Law has been enacted contemporaneously with soon-to-be finalized federal rules on standardized health transactions enacted as part of the federal Administrative Simplification initiative under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). The federal and state approaches do not appear to be a good policy fit although rulemaking by New Jersey may avoid conflicting approaches.

I. EDI Standards and Timetable.

The HINT Law enables the Commissioner of Banking and Insurance (the "Commissioner") to adopt a timetable for implementing electronic transmission of health care claims and enrollment information. Because New Jersey's EDI initiative will be influenced by forthcoming Administrative Simplification rules under HIPAA, the Commissioner must not adopt a New Jersey timetable until 90 days after the final federal rules are adopted. Considering the progress of the federal process, the New Jersey timetable should be established by the end of the first quarter of 2000.

In addition, the HINT Law authorizes the Commissioner to adopt standardized forms for claims transactions and enrollment information. Under HIPAA, standardized forms have been proposed, but not finally adopted for eight different types of EDI transactions. For example, the UB-92 may be replaced by ASC X12N 837. Unlike HIPAA, the Commissioner is authorized to adopt standards both electronic transactions and paper transactions.

II. Payor Duties under the HINT Law.

Payors under the HINT Law have two core duties. First, each payor must adopt and use the standardized claims and enrollment forms. Second, payors must comply with detailed prompt payment rules to expedite timely payment of both paper and electronic claims.

Payors have six months from the date of the Commissioner's timetable to demonstrate their ability to adopt and apply the transaction standards.Twelve months after the Commissioner adopts uniform transaction standards, payors must require use of those standards under all of there insurance contracts.

The HINT Law further established detailed prompt claims payment requirements for payors. Clean electronic claims must be paid the earlier of 30 days from submission or the comparable date established by Medicare. Clean paper claims must be paid within 40 days. Late paid claims are subject to an interest charge at ten (10%) percent per annum. Detailed provisions describe how and when a claim is a "clean" claim with delays permitted for incomplete documentation, improper coding and suspicion of fraud.

Payors include hospital service corporations, medical and health service corporations, health insurers, HMOs, dental plans, dental service corporations, prepaid prescription plans, and TPAs which are subsidiaries of payors.

III. Provider Duties under the HINT Law.

Most health professionals and hospitals are required under the HINT Law to file claims on a timely basis for their patients unless their patients opt to file themselves. Most claims must be filed within 60 days except for those involving an assignment of benefits which must be filed within 180 days. Exceptions are provided for excusable late filings.

IV. HINT and Federal Law.

For paper based claims transactions, the HINT Law will be the law of New Jersey on paper transactions, prompt payment and provider claims submission duties. Current Federal law, however, supercedes state law in significant areas of the subject matters addressed by the HINT Law. For example, the Administrative Simplification provisions of HIPAA expressly preempt and take precedence over contrary state law. Although the HINT Law requires the Commissioner to adopt a timetable for New Jersey, federal law has already established a timetable for the nation. Likewise, preemption questions may arise under ERISA about the effort under the HINT Law to regulate TPA subsidiaries of state insureres when the TPAs do business with self-funded health benefit plans. Notwithstanding these legal complexities, the HINT Law has underscored New Jersey's commitment to administrative simplification on a aggressive timetable.

This Update was prepared by Edward F. Shay, an attorney in Saul Ewing's Healthcare Department in its Philadelphia office. For additional information, contact Mr. Shay at (215)-972-7141, or by e-mail at

Note: Posted articles are for general information only and should not be considered legal advice.