Provides for the annual audits of health maintenance organizations, health insurers and health and hospital service corporations

Title of bill

An act to amend the insurance law and the public health law, in relation to annual audits of health maintenance organizations, health insurers and health and hospital service corporations

Purpose or general idea of bill

To provide greater disclosure to managed care consumers and enhanced enforcement of current requirements on health care plans.

Summary of specific provisions

Section one adds two new subsections (e) and (f) to section 3217-a of the Insurance Law to: 1) require the health commissioner and insurance superintendent to audit insurers and HMOs for compliance with various consumer protection provisions of the Public Health and Insurance Law; 2) adds the results of the audits to the state Insurance Department (SID) consumer guide on managed care plans and health insurers; and 3) authorizes the SID to require insurers and HMOs not in compliance with the law to undergo prior approval for rate increase requests rather than "file and use" rates.

Section two adds two new subsections to section 4324 of the insurance law to make the same change described in section one. Section three amends section 210 of the insurance law to require HMOs and insurers to report loss ratios on certain product lines, and requires the superintendent to include such information and information on compliance with various provisions of the Insurance and Public Health laws in the annual consumer guide to health insurance.

Section four also amends section 4408 of the Public Health Law to require the disclosure described in section one and to add the enforcement provisions described in section one. Section five sets forth the effective date.

Justification

Chapter 705 of the laws of 1996, modeled on legislation approved by the Assembly the three previous years, contains comprehensive managed care consumer protections that are among the most sweeping of any state in the nation. The new law provides enhanced disclosure, special provisions to enable patients with serious medical problems to access specialty care, requires plans to establish formal grievance procedures for their enrollees, requires that Utilization Review (UR) agents obtain licenses and meet quality standards and allow enrollees to appeal UR decisions. Chapters 637 and 666 of 1997 set out standards for the payment of claims to consumers and providers. Chapter 586 of the laws 1998 authorizes consumers to appeal medical denials to outside review boards. The bill would enhance the protections in the current law in several ways. First, the bill would improve the quality of information consumers are entitled to receive and thus improve their ability to make informed decisions on plans based on their compliance with consumer protection laws. Second, a number of recent studies by the Attorney General and consumer groups concluded that compliance with the requirements in the law by health care plans is abysmal. This bill would require the departments of Insurance and Health to aggressively monitor compliance with the law and provide stiff new penalties for those plans which don't.

Fiscal implications

None.

Effective date

Immediately.