Relates to standards for prompt, fair and equitable settlement of claims for health care and payments for health care services

Summary of specific provisions

Section one amends subsections (a) and (b) of section 3224-a of the insurance law, as amended by chapter 666 of the laws of 1997.

Prompt pay timeframes are shortened from the current 45 day requirement. claims submitted electronically must be paid within 15 days while paper claims must be paid within thirty days. Further, the current prompt pay statute is amended to reduce the amount of time within which the plan must request additional information to adjudicate a claim. For claims submitted electronically, the plan must request additional information within 15 days-.

The section further states that a health plan may not deny payment for a claim for medically necessary, covered services an the basis of an administrative or technical defect. Providers and health plans can agree to provisions different than those listed in the section; however such agreement may not limit or diminish the rights of a provider in any way as set forth in this section.

Current law Permits Plans to request additional information need to determine liability to pay a claim. This section of the bill amends the law to prohibit plans from generating a coordination of benefits in response to the receipt of a claim in order to determine whether the insured is covered for all or part of the claim by another health plan. Further, a health plan may not deny or delay payment when an insured does not complete or return such questionnaire.

Section two amends subsection (b) of section 3224-b of the insurance law to strengthen protections and establish greater due process when a health insurer seeks refunds for claim overpayments from providers.

The current statute is amended to now include all healthcare providers. A health plan must provide written notice to a provider of its intention to seek recovery of overpayments. The notice must include: patient name, service date, payment amount, proposed adjustment, and a specific explanation of the proposed adjustment.

A health plan may not seek recovery from a provider unless one of the following occurs: the provider agrees to recovery in writing, the provider fails to send its written challenge to the plan within 90 days, recovery has been upheld according to procedures set forth in

the existing contract, or a third party arbitrator upheld the recovery determination.

All overpayment recovery efforts must be limited to: billing/coding errors, incorrect payment rates, ineligibility of a person for coverage, or fraud. A health plan may never initiate a recovery effort for utilization review purposes.

A health plan must also give a provider the opportunity to challenge the recovery determination. The provider must have no less than 90 days from the receipt of a health plan's written notice to provide documentation challenging the alleged overpayments. A challenge that is not resolved between a health plan and provider within 30 days shall be resolved according the procedures set forth in the existing contract or will be submitted to a third party arbitrator for determination.

A health plan may not initiate an overpayment recovery effort more than 24 months after original overpayment was received by a provider. No time limit will apply to recovery efforts that are based on the belief of fraud or other intentional misconduct, required by or initiated at the request of a self-insured plan, or required by state or federal government program. In the event a provider determines that a plan underpaid a claim, the Plan may defend the determination based on overpayments going back in time as far as the claim underpayment.

A health plan shall never pursue overpayment recovery efforts against an insured if the plan is prevented from pursuing overpayment recovery against the provider. A plan must also assure that all contractors, subcontractors, subvendors, agents and employees affiliated by contract adhere to these requirements. Any contract or agreement made between a health plan and a provider may not limit or diminish the rights of a provider in any way as set forth in this section.

Section three amends the insurance law by adding a new section 3240 to ensure coverage of services by participating providers.

Section 3240, establishes that a health plan that utilizes a network of participating Providers may not deem a provider who participates in the based on the fact that one or more providers rendering services for the same or related medical condition does not participate in the provider network. The plan must pay the participating provider the contracted rate for services regardless of the network status of the other providers. Further, the insured, subscriber or enrollee shall only be subject to the in-network cost sharing provisions of the insurance policy for the services of such participating provider.

Section four amends section 2406 of the insurance law by adding a new subsection (a-l) which states that when a thorough investigation by the State Department of Insurance reveals that a health insurance provider has engaged in a series of acts contrary to the regulations stipulated in section 3224-a of the insurance law, civil Penalties shall be levied which increase in amount for each finding of a consistent pattern or practice contrary to the established, accented regulations of sec. 3224-a.

Section five provides for an immediate effective date.

Justification

Payer accountability involves ensuring adequate financing of the health care delivery system to support existing quality services, to keen pace with the evolution of patient care and to require insurers to pay provider. claims promptly and fully. These reform proposals are intended to improve the current system and prohibit inappropriate health insurance practices or payment methods. Strengthening and improving existing laws regulating the health insurance industry will restore balance between providers and payers, ensure that providers are paid for the medical services they render and, most important, ensure all New Yorkers benefit from enhanced access to quality health care.

In recognition of increased use and speed of electronic claims processing technology, plans should be compelled to pay electronic claims within a shortened timeframe. This bill would reduce the timeframe for payment of claims submitted electronically from 45 days to 15 days. In addition, the bill would reduce the timeframe for payment of paper claims from 45 days to 30 days.

Administrative denials, i.e., denying claims for medically necessary, covered health care services based on a technical error by the provider should be barred. Unless the managed care plan's ability to manage a patient's care has been demonstrably prejudiced, failure to adhere to a technical or an administrative rule should not result in a denial of payment for medically necessary covered services. The most common administrative denials that providers face are: failure to obtain a referral, untimely filing of a claim, late notification of a hospital admission or provision of services, failure to provide notification of a hospital admission and failure to request proper authorization. In the event that new types of administrative denials should emerge, the Superintendent has the authority to specify such administrative denials in a regulation. Providers and plans may agree to language and provisions that are different than those listed, however the agreement cannot diminish the rights of the provider described in this section in any way.

Coordination of Benefits (COB) questionnaires are routinely used by health plans to ascertain whether an insured has other insurance coverage. Unfortunately, many plans issue these questionnaires to insureds upon receipt of a claim for services rendered by a health care provider. These questionnaires are sent despite the fact that the medical care was pre-authorized and insurance coverage and eligibility was verified prior to providing medical care. When the insured fails to return the questionnaire, the insurer either indefinitely pens payment of the claim or denies coverage. This, of course, leaves the provider without reimbursement. While insurers should have the ability to update and maintain information regarding an insured's health insurance coverage, the completion of a COB questionnaire by an insured should bear no relationship to payment of a claim. Plans should be prohibited from delaying or denying claims outright for that reason.

There are currently no statutory limits, requirements or prohibitions on the timing or scope of refund demands issued by health plans to health care providers other than physicians. This bill would extend current statutory protections for physicians to all health care providers and enhance the due process protections for all health care

providers. In the absence of fraud, managed care plans should have no more than two years from the payment of a claim to demand a refund, unless such effort is requested by a self-insured plan or required by state or federal government Programs. In addition, the circumstances under which refund demands can occur are limited to billing/coding errors, incorrect payment rates, ineligibility of a person for coverage or fraud. Under no circumstance should plans he permitted to get a second chance at utilization review in the absence of an additional appeal right for providers.

This bill also requires plans seeking a refund to provide written notification to the provider before seeking a refund or making an adjustment that includes detailed reasons for the refund demand, identification of each previously paid claim for which a refund is sought and offers the provider no less than 90 days to challenge the refund request.

Consumers have been surprised and outraged to learn. that their health insurance plan transformed an obvious in-network medical service to out-of-network because another provider rendering services for the same or related condition was out-of-network. This practice not only potentially costs the patient thousands of dollars, but also puts the hospital in the untenable position of seeking payment from an understandably frustrated and bewildered patient. All the while, the health insurance plan received the financial benefit of having to nay only part of its contracted rate to the hospital and the consumer is forced to pay the balance. For in-network medical care, consumers' financial responsibility should be limited to their co-pay, deductible and/or co-insurance amounts regardless of whether another provider is out-of-network. In addition, health care providers that contract with a health plan, and therefore are participating Providers, should be paid their full contracted rate for services provided to the plan's member regardless of the out-of-network status of another provider rendering care for the same or related condition.

Health plans should be held accountable for their market conduct practices. Consumers should be able to access the benefits for which they paid without unfair and undisclosed penalties. Participating providers should be paid their contracted rate by the managed care organization with which they contract and should not have to pursue the health plan's members for the remainder of the plan's share of the bill.

Currently, the fine for violating the prompt pay statute is $500 per day for each day beyond the day the claim should have been paid and is currently canned at $5,000. These fines do not appear to deter managed care plans from making late payments. This bill would address that by enhancing the Superintendent of Insurance's authority to fine repeat offenders. If a consistent pattern of violations has been identified by the Superintendent, the Superintendent may levy a fine of not more than $100,000. For a second such finding that occurs on or earlier than two years after the first offense, a fine of not more than $300,000 may be levied and for a third such finding that occurs on or earlier than five years after the first offense, a fine can be levied of up to $1,000,000. It is clear that when receiving required compensation for rendered medical services from an insurer is unpredictable or doubtful at best, a health care providers ability to

provide superior medical services to his or her patients is severely compromised. In contracting with health plans, health care providers should feel confident that the terms of a binding agreement will be faithfully upheld. A provider's compensation for rendered services, as well as any benefits he or she can pass on to their patients, depends entirely on the reliability of the original agreement with the health plan. The enactment of stringent standards is thus crucial to the improved functioning of New York's health care system and strict penalty provisions and enforcement mechanisms are essential in ensuring that those standards are followed,

Prior legislative history

2009: A. 3167 Referred to Insurance; 2007-2008: A8114/S5540 Referred to Insurance

Fiscal implications

None

Effective date

This act will take effect immediately.