A patient receives physical therapy from an out-of-network PT practice, or individual PT. Horizon Blue Cross Blue Shield of New Jersey, Inc. ("Horizon"), is billed for the therapy. Unfortunately, Mary, who handles accounts receivable department for the PT, is behind on her collection efforts. By the time Mary catches up on her collection efforts, the patient has received hundreds of dollars of reimbursement directly from Horizon. Mary then contacts Horizon and follows up on the outstanding claims. Horizon tells her that the claims have been paid and the moneys sent directly to the patient. Mary complains about payment to the patient because the patient has signed an assignment of benefits thereby agreeing that the therapist can stand in the shoes of the patient and receive all of the same benefits that the patient is entitled to receive from Horizon, including receipt of payment for claims submitted. Horizon indicates that its subscriber agreement with the patient (Horizon refers to its patients as "subscribers") has an anti-assignment provision voiding any such provision without the express written permission of Horizon. Horizon cites Somerset Orthopedic Associates. V. Horizon Blue Cross of New Jersey, Inc., 345 N. J. Super. 410 (App. Div. 2001) (argued by David S. Barmak on behalf of Somerset Orthopedic Associates) as legal support for this position. Horizon explains that the primary way to motivate suppliers to participate in-network is to offer to send claim payments directly to in-network providers but not out-of-network providers. As fallacious as this seems to Mary, it is, nevertheless, Horizon's stated reason for this payment practice. Concerned and frustrated, Mary contacts the patient and asks if the patient has received payment from Horizon. "Yes, but I can't pay you."  "Why?"  "Because I thought the money was mine and I used it to pay towards my daughter's college tuition." (True story)

What can Mary, on behalf of the PT practice, do? From now until January 16, 2011, Mary can file a lawsuit against the patient for the billed charges, not just the paid amount, for the therapy provided or file criminal charges against the patient for theft and conversion of moneys that were due the practice.  Mary cannot sue Horizon because there is no "privity of contract", i.e., no contractual relationship between the PT practice and Horizon - the practice is out-of-network which, by definition, means no provider contract.

Great news!  On January 16, 2010, then-Acting New Jersey Governor Sweeney signed into law a requirement that managed care plans pay out-of-network providers directly for healthcare services rendered to a patient if the patient has assigned his or her health insurance benefits to the out-of-network provider.  This new law, the "Assignment Law", will take effect on January 16, 2011.  Mary now has a viable method to ensure that she doesn't have to chase patients for money when the supplier is out-of-network. 

The Assignment Law applies to managed care plans that offer both in-network and out-of-network plans.  These plans will be required to remit payment for covered healthcare services directly to the healthcare provider via a check payable to the healthcare provider, or in the alternative, to the healthcare provider and patient as joint payees, with a signature line for each of the payees. The payment by the managed care plan must be made in accordance with New Jersey's Prompt Pay Law ("clean claims" must be paid within thirty days).  If the payment is made only to the patient instead of to the out-of-network provider, the claim will be considered unpaid which means that the payment will be considered overdue under the Prompt Pay Law and subject to an interest charge if not paid to the provider within the time frames specified in the Prompt Pay Law.