Prohibits an insurer from preventing an insured from assigning his or her right to reimbursement for out-of-network services to such service provider

1 Co-sponsor

• Owen H. Johnson

Title of bill

An act to amend the insurance law and the public health law, in relation to the assignment of reimbursement by an insured to an out-of-network provider

Purpose

This bill would amend the insurance and public health laws to prohibit an insurer from preventing an insured from assigning his or her right to reimbursement for out-of-network services to a provider of services such as a physician or hospital

Summary of provisions

Section one (1) and two (2) amend sections 3217-b and 4325 of the insurance law, respectively, as amended by chapter 586 of the laws of 1998, to include a new subsection (g) which states that no insurer shall by contract, written policy, or written procedure, prohibit or restrict any insured from assigning his or her rights to reimbursement for services under the insurance contract to an out-of-network service provider. If the insurer is supplied with such an assignment, the insurer shall make any reimbursement payments directly to the out-of-network provider, and provide the insured patient with written notification delineating the payment. Section (3) includes a new subdivision 6 of section 4406-c of the public health law, which states that no insurer shall by contract, written policy, or written procedure, prohibit or restrict any insured from assigning his or her rights to reimbursement for services under the insurance contract to an out-of-network service provider. If the insurer is supplied with such an assignment, the insurer shall make any reimbursement payments directly to the out-of-network provider, and provide the insured patient with written notification delineating the payment.

Justification

Under current law, HMO's and insurance companies are not required to make direct reimbursement payments to an out-of network provider for medical services rendered, even upon the request of the insured patient. Out-of-network physicians and hospitals attending to insured patients are often obliged to place themselves in a precarious financial position. Providers are expected to obtain reimbursement from the patients themselves, who are much less likely to pay for the services after they have been rendered. An insurer's refusal to pay out-of-network providers directly imposes undue financial risk on the health care provider, makes them less likely to accept these patients to begin with, and unduly pressures out-of-network providers to accept lower rates and participate in the in-network benefits portion of the insurer's network.

Legislative history

: 2008-07S.5183/ REFERRED TO INSURANCE

FISCAL IMPLICATIONS ::None

Effective date

This act shall take effect on the sixtieth day after it shall have become law and shall apply to any insurance contract entered into, amended or modified on or after such effective date.