Requires DOBI to monitor, evaluate, and submit annual report concerning mental health insurance coverage for minors; requires carriers to maintain provider directory.

A5237

ASSEMBLY, No. 5237

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 8, 2026

Sponsored by:

Assemblyman� JAMES J. KENNEDY

District 22 (Somerset and Union)

Assemblywoman� LINDA S. CARTER

District 22 (Somerset and Union)

Assemblywoman� ANDREA KATZ

District 8 (Atlantic and Burlington)

Co-Sponsored by:

Assemblyman Verrelli

SYNOPSIS

���� Requires DOBI to monitor, evaluate, and submit annual
report concerning mental health insurance coverage for minors; requires
carriers to maintain provider directory.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning mental health parity and amending

and supplementing P.L.2019, c.58.

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

���� 1.��� Section 11 of P.L.2019,
c.58 (C.26:2S-10.8) is amended to read as follows:

���� 11.� a. For the purposes of
this section:

���� "Benefit limits"
includes both quantitative treatment limitations and non-quantitative treatment
limitations.

���� "Carrier" means an
insurance company, health service corporation, hospital service corporation,
medical service corporation, or health maintenance organization authorized to
issue health benefits plans in this State or any entity contracted to administer
health benefits in connection with the State Health Benefits Program or School
Employees' Health Benefits Program.

���� "Classification of
benefits" means the classifications of benefits found at 45 C.F.R.
146.136(c)(2)(ii)(A) and 45 C.F.R. s.146.136(c)(3)(iii).

���� "Department" means
the Department of Banking and Insurance.

���� "Mental health
condition" means a condition defined to be consistent with generally
recognized independent standards of current medical practice referenced in the
current version of the Diagnostic and Statistical Manual of Mental Disorders.

���� "Non-quantitative
treatment limitations" or "NQTL" means processes, strategies, or
evidentiary standards, or other factors that are not expressed numerically, but
otherwise limit the scope or duration of benefits for treatment. NQTLs shall
include, but shall not be limited to:

���� (1)�� Medical management
standards limiting or excluding benefits based on medical necessity or medical
appropriateness, or based on whether the treatment is experimental or
investigative;

���� (2)�� Formulary design for
prescription drugs;

���� (3)�� For plans with multiple
network tiers, such as preferred providers and participating providers, network
tier design;

���� (4)�� Standards for provider
admission to participate in a network, including reimbursement rates;

���� (5)�� Plan methods for
determining usual, customary, and reasonable charges;

���� (6)�� Refusal to pay for
higher-cost therapies until it can be shown that a lower-cost therapy is not
effective, also known as fail-first policies or step therapy protocols;

���� (7)�� Exclusions based on
failure to complete a course of treatment;

���� (8)�� Restrictions based on
geographic location, facility type, provider specialty, and other criteria that
limit the scope or duration of benefits for services provided under the plan or
coverage;

���� (9)�� In and out-of-network
geographic limitations;

���� (10) Limitations on inpatient
services for situations where the participant is a threat to self or others;

���� (11) Exclusions for
court-ordered and involuntary holds;

���� (12) Experimental treatment
limitations;

���� (13) Service coding;

���� (14) Exclusions for services
provided by a licensed professional who provides mental health condition or
substance use disorder services;

���� (15) Network adequacy; and

���� (16) Provider reimbursement
rates.

���� "Substance use
disorder" means a disorder defined to be consistent with generally
recognized independent standards of current medical practice referenced in the
most current version of the Diagnostic and Statistical Manual of Mental
Disorders.

���� b.��� A carrier shall approve
a request for an in-plan exception if the carrier's network does not have any
providers who are qualified, accessible and available to perform the specific
medically necessary service. A carrier shall communicate the availability of
in-plan exceptions:

���� (1)�� on its website where
lists of network providers are displayed; and

���� (2)�� to beneficiaries when
they call the carrier to inquire about network providers.

���� c.���� A carrier that provides
hospital or medical expense benefits through individual or group contracts
shall submit an annual report to the department on or before March 1. The
annual report shall contain, to the extent that the commissioner determines
practicable, the following information:

���� (1)�� A description of the
process used to develop or select the medical necessity criteria for mental
health benefits, the process used to develop or select the medical necessity
criteria for substance use disorder benefits, and the process used to develop
or select the medical necessity criteria for medical and surgical benefits;

���� (2)�� Identification of all
NQTLs that are applied to mental health benefits, all NQTLs that are applied to
substance use disorder benefits, and all NQTLs that are applied to medical and
surgical benefits, including, but not limited to, those listed in subsection a.
of this section;

���� (3)�� The results of an
analysis that demonstrates that for the medical necessity criteria described in
paragraph (1) of this subsection and for selected NQTLs identified in paragraph
(2) of this subsection, as written and in operation, the processes, strategies,
evidentiary standards, or other factors used to apply the medical necessity
criteria and selected NQTLs to mental health condition and substance use
disorder benefits are comparable to, and are no more stringently applied than
the processes, strategies, evidentiary standards, or other factors used to
apply the medical necessity criteria and selected NQTLs, as written and in
operation, to medical and surgical benefits. A determination of which selected
NQTLs require analysis will be determined by the department; at a minimum, the
results of the analysis shall entail the following, provided that some NQTLs
may not necessitate all of the steps described below:

���� (a)�� identify the factors
used to determine that an NQTL will apply to a benefit, including factors that
were considered but rejected;

���� (b)�� identify and define the
specific evidentiary standards, if applicable, used to define the factors and
any other evidentiary standards relied upon in designing each NQTL;

���� (c)�� provide the comparative
analyses, including the results of the analyses, performed to determine that
the processes and strategies used to design each NQTL, as written, for mental
health and substance use disorder benefits are comparable to and applied no
more stringently than the processes and strategies used to design each NQTL as
written for medical and surgical benefits;

���� (d)�� provide the comparative
analyses, including the results of the analyses, performed to determine that
the processes and strategies used to apply each NQTL, in operation, for mental
health and substance use disorder benefits are comparable to and applied no
more stringently than the processes or strategies used to apply each NQTL in
operation for medical and surgical benefits; and

���� (e)�� disclose the specific
findings and conclusions reached by the carrier that the results of the
analyses above indicate that the carrier is in compliance with this section and
the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity
Act of 2008, 42 U.S.C. s.18031(j), and its implementing and related
regulations, which includes 45 C.F.R. s.146.136, 45 C.F.R. s.147.160, and 45
C.F.R. s.156.115(a)(3); and

���� (4)�� Any other information
necessary to clarify data provided in accordance with this section requested by
the Commissioner of Banking and Insurance including information that may be
proprietary or have commercial value, provided that no proprietary information
shall be made publicly available by the department.

���� d.��� The department shall
implement and enforce applicable provisions of the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008, 42 U.S.C.
18031(j), any amendments to, and federal guidance or regulations issued under
that act, including 45 C.F.R. Parts 146 and 147, 45 C.F.R. s.156.115(a)(3),
P.L.1999, c.106 (C.17:48-6v et al.), and section 2 of P.L.1999, c.441
(C.52:14-17.29e), which includes:

���� (1)�� Ensuring compliance by
individual and group contracts, policies, plans, or enrollee agreements
delivered, issued, executed, or renewed in this State pursuant to P.L.1938,
c.366 (C.17:48-1 et seq.), P.L.1940, c.74 (C.17:48A-1 et seq.), P.L.1985, c.236
(C.17:48E-1 et seq.), chapter 26 of Title 17B of the New Jersey Statutes
(N.J.S.17B:26-1 et seq.), chapter 27 of Title 17B of the New Jersey Statutes
(N.J.S.17B:27-26 et seq.), P.L.1992, c.161 (C.17B:27A-2 et seq.), P.L.1992,
c.162 (C.17B:27A-17 et seq.), P.L.1973, c.337 (C.26:2J-1 et seq.), and
P.L.1961, c.49 (C.52:14-17.25 et seq.), or approved for issuance or renewal in
this State by the Commissioner of Banking and Insurance.

���� (2)�� Detecting violations of
the law by individual and group contracts, policies, plans, or enrollee
agreements delivered, issued, executed, or renewed in this State pursuant to
P.L.1938, c.366 (C.17:48-1 et seq.), P.L.1940, c.74 (C.17:48A-1 et seq.),
P.L.1985, c.236 (C.17:48E-1 et seq.), chapter 26 of Title 17B of the New Jersey
Statutes (N.J.S.17B:26-1 et seq.), chapter 27 of Title 17B of the New Jersey
Statutes (N.J.S.17B:27-26 et seq.), P.L.1992, c.161 (C.17B:27A-2 et seq.),
P.L.1992, c.162 (C.17B:27A-17 et seq.), P.L.1973, c.337 (C.26:2J-1 et seq.),
and P.L.1961, c.49 (C.52:14-17.25 et seq.), or approved for issuance or renewal
in this State by the Commissioner of Banking and Insurance.

���� (3)�� Accepting, evaluating,
and responding to complaints regarding violations.

���� (4)�� Maintaining and
regularly reviewing for possible parity violations a publicly available
consumer complaint log regarding mental health condition and substance use
disorder coverage, provided that the names of specific carriers will be
redacted and not disclosed on the complaint log.

���� (5)�� The commissioner shall
adopt rules as may be necessary to effectuate any provisions of this section
and the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction
Equity Act of 2008 that relate to the business of insurance.

���� e.���� Not later than May 1 of
each year, the department shall issue a report to the Legislature pursuant to
section 2 of P.L.1991, c.164 (C.52:14-19.1). The report shall:

���� (1)�� Describe the methodology
the department is using to check for compliance with the Paul Wellstone and
Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, 42 U.S.C
s.18031(j), and any federal regulations or guidance relating to the compliance
and oversight of that act.

���� (2)�� Describe the methodology
the department is using to check for compliance with P.L.1999, c.106
(C.17:48-6v et al.) and section 2 of P.L.1999, c.441 (C.52:14-17.29e).

���� (3)�� Identify market conduct
examinations conducted or completed during the preceding 12-month period
regarding compliance with parity in mental health and substance use disorder
benefits under state and federal laws and summarize the results of such market
conduct examinations. This shall include:

���� (a)�� The number of market
conduct examinations initiated and completed;

���� (b)�� The benefit
classifications examined by each market conduct examination;

���� (c)�� The subject matters of
each market conduct examination, including quantitative and non-quantitative
treatment limitations;

���� (d)�� A summary of the basis
for the final decision rendered in each market conduct examination; and

���� (e)�� Individually
identifiable information shall be excluded from the reports consistent with
state and Federal privacy protections.

���� (4)�� Detail any educational
or corrective actions the department has taken to ensure compliance with Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of
2008, 42 U.S.C s.18031(j), P.L.1999, c.106 (C.17:48-6v et al.) and section 2 of
P.L.1999, c.441 (C.52:14-17.29e).

���� (5)�� Detail the department's
educational approaches relating to informing the public about mental health
condition and substance use disorder parity protections under State and federal
law.

���� (6)�� Be written in
non-technical, readily understandable language and shall be made available to
the public by, among such other means as the department finds appropriate,
posting the report on the department's website.

���� f.���� The department shall
post on its Internet website a report disclosing the department's conclusions
as to whether the analyses collected from the carriers as specified in
paragraph (3) of subsection c. of this section demonstrate compliance with the
Mental Health Parity and Addiction Equity Act of 2008 and its implementing
regulations, specifically including whether or not there is compliance with 45
C.F.R. 146.136(c)(4). The name and identity of carriers shall be confidential,
shall not be made public by the department, and shall not be subject to public
inspection.

����
g.��� (1) In addition to
any mental health parity compliance monitoring required by the Paul Wellstone
and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, 42
U.S.C s.18031(j), or any other law, the department shall conduct regular market
conduct reviews, including secret shopper surveys, to assess access to mental
health services for covered persons who are 18 years of age or younger.� The
market reviews shall assess network adequacy and appointment access standards.�
The market reviews shall be conducted for various populations, age groups of
minors, and geographic areas, and shall collect data on those various
classifications, as determined by the department.

����
(2)�� The department shall
require carriers to submit an annual report on mental health services for
minors with data on:

����
(a)�� usage rates for
mental health services for minors, categorized by type of service;

����
(b)�� prior authorization
requirements and denial of coverage requests pursuant to those requirements;

����
(c)�� appeals from coverage
denials and outcomes of those appeals;

����
(d)�� how quickly prior
authorization and appeal determinations are made from the time of request; and

����
(e)�� approval rates for
specialty services, including, but not limited to, intensive outpatient,
partial hospitalization, residential treatment, and eating disorder care.

����
(3)�� The department shall
review the data compiled pursuant to this section to identify barriers to
medically necessary care and to ensure that prior authorization and medical
necessity criteria are applied consistently with mental health parity
requirements.� Recommendations may be included in the report issued pursuant to
paragraph (4) of this subsection.

����
(4)�� No later than one
year following the effective date of
P.L. , c. (C.���������
) (pending before the Legislature as this bill), and annually thereafter, the
department shall submit a report to the Governor and, pursuant to section 2 of
P.L.1991, c.164 (C.52:14-19.1), to the Legislature, as required by this
subsection.� The report shall be accessible to the public on the department�s
website.

(cf: P.L.2019, c.58, s.11)

���� 2.��� (New section)� a.� A carrier
shall maintain an accurate and regularly verified provider directory.� The
directory shall be provided in non-technical, readily understandable language
and shall be made available to the public on the carrier�s website.

���� b.��� The directory shall also
be made available in a downloadable, machine-readable format to support
independent research, verification, and monitoring of network adequacy and
access.

���� 3.��� (New section)� A carrier
that violates the provisions of P.L. , c.��� (C.���������
) (pending before the Legislature as this bill) shall be subject to the
penalties established pursuant to section 16 of P.L.1997, c.192 (C.26:2S-16).

���� 4.��� This act shall take
effect on the first day of fourth month next following the date of enactment,
except that the department may take any administrative action as may be
necessary to implement the provisions of this act.

STATEMENT

���� This bill provides that, in
addition to any mental health parity compliance monitoring required pursuant to
current law, the Department of Banking and Insurance is required to conduct
regular market conduct reviews, including secret shopper surveys, to assess
access to mental health services for covered persons who are 18 years of age or
younger.� The bill provides that the market reviews are required to assess
network adequacy and appointment access standards, and are to be conducted for
various populations, age groups of minors, and geographic areas, and to collect
data on those various classifications, as determined by the department.

���� The bill requires health
insurance carriers to submit an annual report on mental health services for
minors with data on:

���� (1)�� usage rates for mental
health services for minors, categorized by type of service;

���� (2)�� prior authorization
requirements and denial of coverage requests pursuant to those requirements;

���� (3)�� appeals from coverage
denials and outcomes of those appeals;

���� (4)�� how quickly prior
authorization and appeal determinations are made from the time of request; and

���� (5)�� approval rates for
specialty services, including, but not limited to, intensive outpatient,
partial hospitalization, residential treatment, and eating disorder care.

���� The department is required to
review the data compiled pursuant to the bill to identify barriers to medically
necessary care and to ensure that prior authorization and medical necessity
criteria are applied consistently with mental health parity requirements.�

���� The department is also
required to submit an annual report to the Governor and the Legislature on the
findings and recommendations based on the bill�s requirements.� The report is
to be accessible to the public on the department�s website.

���� The bill stipulates that a
carrier is to maintain an accurate and regularly verified provider directory.� The
directory must be provided in non-technical, readily understandable language
and must be made available to the public on the carrier�s website.�
Additionally, the directory will be made available in a downloadable,
machine-readable format to support independent research, verification, and
monitoring of network adequacy and access.

���� A carrier that violates the
provisions of the bill is subject to the penalties established by the "Health
Care Quality Act."� Those penalties include civil fines of not less than
$250 and not greater than $10,000 for each day that the carrier is in violation.�
Additionally, the commissioner may issue an order directing a carrier to cease
and desist from engaging in any act or practice that is in violation of the
provisions of the bill.