Provides enhanced consumer and provider protections

Summary of provisions

Section 1 of the bill adds a new Insurance Law § 316 to provide that the Superintendent may promulgate regulations to require that any submissions made by an insurer or other person or entity to the Insur- ance Department be submitted by electronic means. An affected person or entity may request an exception upon demonstration of undue hardship, impracticability, or good cause, subject to the approval of the Super- intendent.

Sections 2 and 5 of the bill amend Insurance Law §§ 3216(d)(1)(G) and 3221(a)(9) to extend the time for an insured to submit a written proof of loss to an insurer from 90 to 120 days.

Sections 3, 19 and 32 of the bill amend Insurance Law §§ 3217-b and 4325 and Public Health Law (PHL) § 4406-c respectively to: (1) prohibit an insurer or HMO from implementing an adverse reimbursement change to a contract with a health care professional unless the insurer or HMO gives the health care professional 90 days written notice of the change; and (2) allow the health care professional, within 30 days of such notice, to terminate his or her contract with the insurer or HMO effective upon the implementation date of such adverse reimbursement change.

Sections 4 and 17 of the bill add new Insurance Law §§ 3217-d and 4306-c respectively to require that insurers offering comprehensive policies establish grievance procedures and provide access to care consistent with the requirements of Article 48 of the Insurance Law.

Section 6 of the bill amends Insurance Law §§ 3224-a(a) and (b) to require insurers and HMOs to pay claims submitted electronically within 30 days. Under current law, the Superintendent may provide guidance to clarify the Insurance Department's current interpretation that the payment time frame applies from the date the provider submits a clean claim. Section 6 further expands the type of insurers covered by Insur- ance Law § 3224-a to include municipal cooperative health benefits plans certified pursuant to Article 47 of the Insurance Law.

Section 7 of the bill adds a new Insurance Law § 3224-c to prohibit insurers and HMOs from denying a claim on the basis that they are coor- dinating benefits and another insurer, HMO or other entity is liable for payment of the claim, unless the insurer or HMO has a reasonable basis to believe that the insured/enrollee has other health insurance coverage which is primary. Section 7 further provides that when an insurer or HMO does not have current information from an insured/enrollee regarding other coverage, the insurer or HMO can request such information and allow the insured/enrollee 45 days to submit the information.

Section 8 of the bill amends Insurance Law § 3224-a(c) to provide that where a prompt payment violation is determined as the result of the Superintendent's own investigation, the insurer or HMO shall not be subject to a civil penalty if the Superintendent determines that the insurer or HMO has processed at least ninety-eight percent of the claims submitted in a calendar year in compliance with the requirements of this section. However, this does not apply to violations as a result of indi- vidual complaints from providers or insureds. Section 8 further provides that nothing shall limit or exempt an insurer or HMO from payment of a claim or interest.

Section 9 of the bill adds a new Insurance Law §§ 3224-a(g) and (h) to provide that except as otherwise permitted by law, health care claims must be submitted by health care providers within 120 days after the date of service; provided, however, that nothing precludes the parties

from agreeing to a time period that is more favorable to the health care provider. Section 9 further provides that the 120-day timeframe does not abrogate any right or reduce or limit any additional time period for claim submission provided by Regulation 178 (the "Coordination of Bene- fits" regulation) that was adopted by the Insurance Department on April 1, 2009. Thus, claims submitted consistent with the provisions of that regulation would not be subject to the denial or reduction of payment provisions contained in this section.

Section 9 also provides in connection with contracts for the provision of services pursuant to §364-j or 369-ee of the Social Services Law or Title I-A of Article 25 of the Public Health Law that nothing precludes the parties from agreeing to a different time period for the submission of claims, but in no event less than 90 days, and that existing contract provisions shall not be superseded except to the extent that the contract provides less than 90 days.

Section 9 of the bill further provides that an insurer or HMO shall permit a participating health provider to request a reconsideration of a claim that is denied as untimely. If a health care provider demonstrates that the untimely claim was the result of an unusual occurrence and the health care provider has a pattern or practice of timely claim submission, an insurer or HMO may reduce reimbursement to a participat- ing provider for an untimely claim by a penalty of no more than 25 percent. Section 9 also provides that participating providers and insur- ers or HMOs may agree to a lesser reduction or no reduction at all, that is, the "penalty" can be reduced even to "zero."

Section 10 of the bill amends Insurance Law § 3224-b(b) to extend protections and timeframes relating to overpayment recovery efforts initiated by insurers and HMOs, currently applicable to physicians, to all providers. Section 10 also requires insurers and HMOs to allow a provider the opportunity to challenge an overpayment recovery.

Sections 11 and 18 of the bill amend Insurance Law §§ 3231(e) and 4308(h) respectively to remove the limitation that an insured's/enrollee's contract must be in effect as of the date a divi- dend or credit is issued in the event a loss-ratio requirement is not met, and requires the insurer or HMO to make a reasonable effort to identify and refund former policy or contract holders.

Sections 12, 13, 14 and 31 of the bill add new Insurance Law 3216(i)(26), 3221(k)(15) and 4303(ff) and Public Health Law § 4406(3) to prohibit insurers and HMOs from treating a hospital that participates within a network as a non-participating provider solely because the health care provider admitting or rendering services to the insured/enrollee is a non-participating provider. These sections also prohibit insurers and HMOs from treating a health care provider that participates within a network as a non-participating provider solely because services are rendered in a non-participating hospital.

Sections 15 and 16 of the bill add new Insurance Law §§ 4305(1) and 4306(n) to require insurers and HMOs to provide insureds at least 120 days to submit claims.

Sections 20 and 33 of the bill amend Insurance Law § 4803(a) and PHL 4406-d(1) respectively to require that if a newly-licensed health care professional, or a health care professional moving to New York from another state, joins a group practice of health care professionals that participates in the in-network portion of an insurer's or HMO's network, but the health care professional is not credentialed or declined by the insurer or HMO within 90 days, the health care professional shall be deemed "provisionally credentialed" and shall participate in the in-net- work portion of an insurer's or HMO's network until the final creden- tialing determination is made by the insurer or HMO.

Sections 21 and 34 of the bill add new Insurance Law § 4900(g-7) and PHL § 4900(7-g) respectively to define "rare disease treatment."

Sections 22 and 35 of the bill amend Insurance Law § 4903(c) and PHL 4903(3) respectively to require utilization review agents to make deter- minations involving post-hospital home health care services within one business day of receipt of the necessary information, instead of within three business days as would otherwise apply under Insurance Law 4903(b) and PHL § 4903(2). Sections 22 and 35 further provide that when the day subsequent to the request for post-hospital home health care services falls on a weekend or holiday, a decision shall be made within 72 hours of receipt of the necessary information. Sections 22 and 35 additionally state that if a request for home health care services and all necessary information is submitted prior to hospital discharge, a utilization review agent shall not deny coverage for home health care services on the basis of medical necessity or lack of prior authori- zation while the utilization review agent's determination is pending.

Sections 23 and 36 of the bill amend Insurance Law § 4904(b) and PHL 4904(2) to specify that home health care services following discharge from an inpatient hospital admission shall be eligible for an expedited appeal with a utilization review agent.

Sections 24 and 37 of the bill amend Insurance Law § 4906 and PHL § 4906 respectively to provide that a hospital and an insurer or HMO may agree to utilize an alternative dispute resolution mechanism in lieu of the external appeal process set forth in Article 49 of the Insurance Law and Article 49 of the PHL.

Sections 25 and 38 of the bill amend Insurance Law § 4910(b) and PHL 4910(2) respectively to allow providers to appeal concurrent adverse determinations through the external appeal process.

Sections 26 and 39 of the bill amend Insurance Law §§ 4910(b)(2)(B) and (C) and PHL §§ 4910(2)(b)(ii) and (iii) respectively to provide that an insured/enrollee, the insured/enrollee's designee and, in connection with retrospective adverse determinations, an insured/enrollee's health

care provider, may request an external appeal if the insured/enrollee has a life-threatening condition and is eligible for rare disease treat- ment.

Sections 27 and 40 of the bill amend Insurance Law §§ 4914(b)(2) and (3) and PHL §§ 4914(2)(b) and (c) respectively to require an external appeal agent to notify a provider, when appropriate, of an external appeal determination.

Sections 28 and 41 of the bill amend Insurance Law 4914(b)(4)(B)(ii)(a) and PHL § 4914(2)(d)(B)(ii)(1) respectively to require that, in determining an external appeal involving a rare disease treatment, the external appeal agent must consider whether such treat- ment is "likely to benefit" the insured/enrollee.

Sections 29 and 42 of the bill amend Insurance Law § 4914(d) and PHL 4914(4) respectively to require a provider to pay the cost of an external appeal of a concurrent adverse determination if the insurer's or HMO's denial is upheld and require that the insurer or HMO and provider evenly divide the cost of the external appeal of a concurrent adverse determination if the denial is upheld in part. Further, if the Superintendent determines that insurers and HMOs or providers are expe- riencing hardship as a result of this division of payment, the bill authorizes the Superintendent and the Commissioner of Health to promul- gate regulations to limit such hardship. Sections 29 and 42 also author- ize the Superintendent to confirm an insured's/enrollee's designation of a provider to bring an external appeal on his or her behalf and set forth procedures and timelines for situations when such authorization is exercised. In particular, if the insured/enrollee fails to confirm a designation, the Superintendent shall offer the provider an opportunity to file an external appeal on its own behalf.

Sections 30 and 43 of the bill add a new Insurance Law § 4917 and PHL 4917 respectively to require that when a provider's external appeal of a concurrent adverse determination is upheld by an external appeal agent, including in cases when the provider is acting as the designee of the insured/enrollee, the provider shall not pursue reimbursement from the insured/enrollee, except for any copayment, coinsurance or deductible.

Section 44 of the bill amends Chapter 451 of the Laws of 2007 to provide that Insurance Law § 3238(a)(1)(iii) shall expire and be deemed repealed December 31, 2011, instead of December 31, 2009.

Sections 45, 46 and 47 of the bill are intentionally omitted.

Section 48 of the bill provides that the bill would take effect January 1, 2010: except the amendments made by §§ 20 and 33 of the bill, amend- ing Insurance Law § 4803(a) and PHL § 4406-d(l) in regard to provisional credentialing, would take effect on October 1, 2009 and apply only to new applications; the amendments made by §§ 3, 19 and 32 of the bill amending Insurance Law §§ 3217-b(i), 4325(i), and Public Health Law §4406-c(5-d) shall not affect the repeal of those subsections or subdi-

vision; the amendments made by §§ 8 and 44 of the bill, amending Insur- ance Law §§ 3224-a(c) and 3238(a)(1)(iii) shall take effect immediate- ly; the amendments made by § 9 of the bill amending Insurance Law 3224-a shall apply to dates of service on or after April 1, 2010; and the amendments made by §§ 2, 4, 5, 15, 16 and 17 of the bill amending Insurance Law §§ 3216(d)(1)(G), 3217-d, 3221(a)(9), 4305(1), 4306(n) and 4306-c shall take effect January 1, 2011.

Existing law

Insurance Law §§ 3217-b and 4325 and PHL § 4406-c govern contracts and relationships between insurers and HMOs and their providers and include provisions such as a prohibition on restrictions against complaints by providers to governmental bodies about the practices of an insurer or HMO and a prohibition on contract provisions that transfer financial risk from insurers or HMOs to providers.

Insurance Law §§ 3231 and 4308 address premium rates and dividends for health insurance policies.

Insurance Law § 3224-a establishes standards for the prompt payment of health care claims. Insurers and HMOs must pay undisputed claims within 45 days of receipt. If a claim is disputed, the insurer or HMO must pay the undisputed portion of the claim and notify the insured/enrollee of the dispute within 30 days of the claim's receipt.

Insurance Law § 3224-b imposes limitations on overpayment recovery efforts.

Insurance Law § 4801(c) defines "managed care health insurance contract" and "managed care product."

Insurance Law § 4802 establishes a grievance procedure in connection with managed care products.

Insurance Law § 4803 and PHL § 4406-d set forth requirements for health care professional applications for network participation.

Insurance Law § 4804 establishes requirements for access to specialty care.

Article 49 of the Insurance Law and Article 49 of the PHL require insur- ers and HMOs to have a process for rendering utilization review determi- nations and establish a right to utilization review and external appeal for insureds/enrollees and, in cases of retrospective adverse determi- nations, providers.

Insurance Law § 4900(g-6) defines an "out-of-network denial" for a managed care product.

Insurance Law § 4906 and PHL § 4906 provide that any agreement which purports to waive, limit, disclaim, or in any way diminish the rights set forth in Insurance Law Article 49 or PHL Article 49, except as

provided pursuant to Insurance Law § 4910 or PHL § 4910, shall be void as contrary to public policy.

Insurance Law § 4910(b) and PHL § 4910(2) permit an insured/enrollee, the insured's/enrollee's designee and, in connection with retrospective adverse determinations, an insured's/enrollee's health care provider, to request an external appeal in certain circumstances. In particular, such appeal is permitted if services have been denied as not medically necessary or as experimental or investigational.

Insurance Law § 4914(b)(4) and PHL § 4914(2)(d) set forth the standards by which certain external appeals shall be determined.

Insurance Law § 4914(d) and PHL § 4914(4) provide that payment for an external appeal shall be the responsibility of the insurer/HMO.

PHL § 4406-c provides that HMOs may not prohibit providers from disclos- ing information to enrollees about the availability of medical care and the products offered by the plan, or from advocating for particular courses of treatment, and requires that contracts between HMOs and providers contain certain provisions.

State Technology Law § 305 states that no person shall be required to submit or file any record electronically to any government entity except as otherwise provided by law.

Legislative history

Certain provisions contained in this bill were included in A.11737/S.4481-A of 2007-08, which passed the Senate but not the Assem- bly.

Statement in support

Since the advent of managed care, legislative action has been essential to ensure that consumers and providers receive appropriate protection under this system of health care delivery. Significant steps towards this goal were taken in the 1990s with the enactment of the Managed Care Reform Act and External Appeal Law, and again in 2007 with the enactment of additional managed care reforms. Experience under these statutes, however, has shown that the present legal regime remains insufficient to provide sufficient access to health care for consumers, ensure equal treatment, and guarantee timely payment to providers. This bill will implement a series of necessary reforms to New York's legal regime for managed care, and thereby take further legislative steps towards these goals.

New York's Managed Care Reform Act, enacted in 1996 and codified as Title I of Article 49 of both the Insurance Law and the PHL, establishes protections for health care professionals with respect to applications and terminations, imposes access to care requirements, establishes a grievance process and requires insurers and HMOs to have a process for rendering utilization review determinations and a process for insured persons to appeal such determinations with the insurer or HMO. Specif-

ically, the Managed Care Reform Act provides the insured/enrollee, the insured's/enrollee's designee and, in the case of a retrospective adverse determination, the insured's/enrollee's health care provider, with the right to appeal an adverse determination with the insurer or HMO.

Building upon the Managed Care Reform Act, the External Appeal Law, enacted in 1998 and codified as Title II of Article 49 of both the Insurance Law and the PHL, established an additional level of appeal, independent of the insurer or HMO, if a denial is upheld in the insur- er's or HMO's internal utilization review process. Specifically, the External Appeal Law permits an insured/enrollee, the insured's/enrollee's designee and, in the case of a retrospective adverse determination, an insured's/enrollee's health care provider, to appeal a final adverse determination issued by the insurer or HMO to an external appeal agent.

Additional managed care protections for consumers and providers were enacted in 2007. These protections impose limitations on when claims for preauthorized services may be denied, establish a right to an external appeal for certain out-of-network denials, require a cooling-off period for terminations of contracts between hospitals and insurers or HMOs, require the collection and dissemination of preferred provider organiza- tion information for quality assurance reporting purposes, and establish timeframes for out-of-network provider claim submissions to certain HMOs.

This bill builds upon these reforms to provide further protections to consumers and providers. In particular, the bill provides enhanced consumer protections by: (1) extending existing protections applicable to HMO products, including grievance requirements and access to special- ty care protections to HMO look-alike products offered by insurers; (2) changing the criteria for an external appeal agent's review of a rare disease treatment to require an agent to consider whether the treatment is likely to benefit the insured/enrollee, rather than considering whether the treatment is more beneficial than any standard treatment; (3) requiring utilization review agents to use a one business day or 72 hour utilization review timeframe for determinations involving post-hos- pital home health care services and further requiring home health care services to be covered while a decision is pending when the request for home health care services and all information is provided prior to hospital discharge; and (4) removing the limitation that an insured's/enrollee's contract must be in effect as of the date a divi- dend or credit is issued in the event a loss ratio requirement is not met. These protections will ensure that consumers are better able to access health care services, and that consumers with similar types of health insurance coverage are able to enjoy the same protections.

In addition, the bill establishes enhanced provider protections by: (1) prohibiting insurers and HMOs from implementing an adverse reimbursement change to a contract with a health care professional without prior notification; (2) allowing the provisional credentialing of new health

care professionals; (3) allowing providers to pursue an external appeal of a concurrent adverse determination; and (4) prohibiting insurers and HMOs from treating hospitals and providers that participate within a network as non-participating solely because one or more other providers rendering services to the insured/enrollee for the same or related medical condition does not participate within the insurer's or HMO's provider network. This latter provision in particular will address concerns raised by hospitals and other providers that participate with an insurer or HMO but are treated as non-participating providers simply because the physician admitting the patient to the hospital, or another health care professional that provides services to an admitted patient, does not participate with the insurer or HMO. In such cases, the provider may be reimbursed at the less favorable out-of-network rate and the insured/enrollee will bear a higher copayment, coinsurance or deduc- tible; in other cases, the claim may be denied.

The bill also establishes protections to ensure the prompt processing and payment of health care claims by: (1) shortening the timeframe for payment of electronic claims to 30 days; (2) prohibiting insurers and HMOs from denying payment due to coordination of benefits unless the insurer or HMO has a reasonable basis to believe that the insured has other coverage; and (3) extending to all providers the limitations on overpayment recovery efforts initiated by insurers and HMOs and giving providers the opportunity to challenge an overpayment recovery. These prompt payment protections will ensure that insurers and HMOs make payment for all medically necessary services in a timely manner.

Budget implications

This bill will not have a fiscal impact to the State.

Effective date

This bill takes effect January 1, 2010: except the amendments made by 20 and 31 of the bill, amending Insurance Law § 4803(a) and PHL 4406-d(1) in regard to provisional credentialing, would take effect on October 1, 2009 and apply only to new applications; the amendments made by §§ 3, 19 and 32 of the bill amending Insurance Law §§ 3217-b(i), 4325(i), and Public Health Law §4406-c 5-d shall not affect the repeal of those subsections or subdivision; the amendments made by §§ 8 and 44 of the bill amending §§ 3224-a(c) and 3238(a)(1)(iii) of the Insurance Law shall take effect immediately; the amendments made by § 9 of the bill amending § 3224-a of the Insurance Law shall apply to dates of service on or after April 1, 2010; and the amendments made by §§ 2, 4, 5, 15, 16 and 17 of the bill amending §§ 3216(d)(1)(G), 3217-d, 3221(a)(9), 4305(1), 4306(n) and 4306-c of the Insurance Law shall take effect January 1, 2011.