Relates to overpayments to health care providers when fraud or other intentional misconduct is alleged

Title of bill

An act to amend the insurance law, in relation to overpayments to health care providers

Purpose or general idea of the bill

This bill seeks to amend the insurance law to hold health care plans financially liable when they erroneously allege fraud, intentional misconduct, or abusive billing on the part of a health care provider, in an attempt to recover overpayments to the health care provider after twenty-four months has expired since the payment was issued.

Summary of specific provisions

Section (1) amends section 3224-b of the insurance law by adding a new paragraph 2-a which states that if a provider of a health care plan alleges fraud or other intentional misconduct, or abusive billing, in an attempt to seek recovery of an overpayment more than twenty-four months after the original payment was received by the health care provider, and it is discovered that the payment in dispute was not the result of fraud or other intentional misconduct, such provider of the health care plan shall be responsible for the reasonable legal fees of the health care provider connected with the defense of the health plan's allegations. Section one further stipulates that the Department of Insurance shall fine any provider of a health care plan found to have knowingly, willfully, or recklessly made false charges under this section, in an amount of up to five thousand dollars per payment that is falsely charged to have been the result of fraud or other intentional misconduct or abusive billing.

Section (2) provides the effective date.

Justification

Under current law, insurance companies cannot initiate the overpayment recovery process after twenty-four (24) months have passed since the original payment to the health care provider was received, except in cases where it alleges fraud or abusive billing. However, where dubious claims and suspicions of fraud or abusive billing are made by insurers, there should be a penalty since by making the allegations they extend the period of time in which they are permitted to initiate the payment recovery process. Health care providers incur a substantial cost in defending these allegations and should be reimbursed for legal fees incurred when the charges made were done recklessly, knowingly or willfully.

The expenditures required to justify claims payments by providers are exorbitant, and have significantly contributed to the increase in medical care costs. It is essential to impose stiff penalties when insurers indefensibly allege cases of fraud or abusive billing for the sole purpose of extending the look back period, and restore balance between the participants in our health care system.

This legislation will hold health insurers liable for the financial costs associated with knowingly or recklessly making baseless claims of fraud or abusive billing against health care providers, and impose financial penalties in each instance to discourage this practice and mitigate the costs of justifying claims payments for health care providers in the future.

Legislative history

2009: A.3342 Referred to Insurance 2007-08: A.6469/S.5414 Referred to Insurance

Fiscal implications

None.

Effective date

This act shall take effect immediately.