Establishes procedures for the collection of overpayments from health care providers

Summary of provisions

The legislation would amend Section 3224-a of the Insurance Law to establish procedures for the collection of overpayments based upon eligibility of the insurer, and when the plan believes they overpaid the provider.

1. For refund demands based on eligibility, the legislation would require health insurance companies and HMOs to give specific information to health care providers including the reason for the refund demand, as well as any information the plan may have regarding another responsible Payor. The legislation would grant a health care provider an additional period of time to submit the claim to the proper insurer.

2. For refund demands based upon coding disputes, the legislation would require health plans to provide specific information to providers about each claim for which a refund is sought to permit providers the opportunity to adequately defend themselves. It would prohibit the collection of overpayment demands unless and until a meaningful opportunity to challenge the refund demand has been given. The legislation would also prohibit extrapolation to determine overpayments except where the provider consents to use extrapolation and several other steps are taken to assure proper notice to the provider, including disclosure of the extrapolation methodology.

In addition the amendments to this section would

Prohibit the collection of overpayments where utilization review has already been made, except when the reason for the refund demand is the ineligibility of the insured.

Prohibit the collection of overpayments by offsetting the future payments unless the provider consents.

Permit health care providers to pay back overpayments in installments.

The legislation would also amend PHL Section 4406-d and the Insurance Law Section Section 4603 to assure that health plans, on a periodic basis, notify

providers regarding the inappropriate use of particular billing codes that may subject a provider to an audit.

The legislation would also amend PHL Section 4406-d and Insurance Law Section 4803 to assure the Health Department and Insurance Department are apprised of any comparative profiling information that health plans are sending to physicians.

The legislation would amend PHL Section 4406-c and Insurance Law Section 3217-b to add to the list of those items that health plans are required to divulge to contracting physicians:

That the health plan will notify the health care provider of specific changes to the fee schedule or changes in the payment methodology as soon as reasonably practicable;

That the provider can obtain information regarding specific fees by submitting a request in writing or by electronic means;

That the provider can obtain the most recent information maintained by the health plan regarding enrollment information.

Justification

Many health care providers across New York State have been sent demands by health insurance companies for refunds of claims previously paid long after the time that such payment was made. These refund demands have at times totaled tens of thousands or even hundreds of thousands of dollars. To make matters worse, physicians frequently are given little information from health plans regarding why these refunds have been sought, making it difficult for the physician to even have a meaningful opportunity to challenge the refund demands. Moreover, because the health care provider will likely continue providing care to, the health plan's enrollees, a health plan will often seek to collect the alleged overpayments by offsetting future payments owed by the health plan for health care services rendered to other health plan enrollees, a situation that greatly limits the ability of health care providers to challenge these refund demands when appropriate.

This legislation would set forth the steps that a health plan or insurer must take in order to collect a refund when a health plan makes a determination post-payment that a patient was not insured at the time of service, that the insurer was not the primary payor, or that the insurer overpaid the health care provider. To wit because of post-payment eligibility determinations, this legislation would require the health plan seeking the refund to state in the notice to the health care provider the company they believe is the legally responsible payor, or state that they are not aware of another legally responsible payor. This information is often never provided. To address the current problem that a health care provider may be unfairly time-barred, following a refund demand, from submitting the claim to the appropriate payer, the legislation would expressly permit a health care provider a window of opportunity to seek payment from the health insurance company legally responsible for making payment even though such health care provider would otherwise be time-barred.

With regard to past-payment coding disputes, this legislation would require health plans to specify in writing to the health care provider a detailed finding for each and every claim for which the health plan believes an overpayment was made. This would permit the health care provider an opportunity to review their own records to defend to the health plan why they believe the level of service provided to the patient noted on the claim was appropriate. Moreover, the legislation would prohibit, in most instances, the practice of some health insurers which review a small number of claims and extrapolate the findings over all claims submitted by such health care provider to arrive at an often gargantuan overpayment demand amount. Recognizing there may be instances when a health care provider may prefer to use this sampling technique to determine a total overpayment instead of agreeing to review of all claims they have submitted, this legislation would permit the use of this sampling and extrapolation methodology where the health care provider consents.

This legislation would also prohibit health plans from collecting the overpayment refund demanded unless the health care provider has been given a meaningful opportunity to challenge the determination. In those situations where a refund has been determined to be appropriate, the bill would permit the overpayments to be paid back in installments. An offset of future payments would be appropriate where the health care provider consents.

Moreover, this legislation would enact proactive measures to assure that health care providers are given appropriate notice regarding issues that could subject a health care provider to an audit in the future. For example, the legislation would require health plans to be proactive in identifying billing practices that may cause health care providers to be audited and subject to overpayment demands in the future. The legislation would also assure that health care providers are able to access the most up-to-date information maintained by the health plan regarding the eligibility of a particular patient to have their health care covered by that particular health plan. The legislation would also assure that physicians will be advised as soon as possible regarding changes to how the health plan will pay for particular services rendered to the plan enrollees, so as to assure that health care providers are in the health plan. To assure compliance, the legislation would also, for the first time, establish monetary penalties for health plans who fail to provide information to their contracting health care providers as set forth by law.

This legislation would strike an appropriate balance between permitting insurers the opportunity to review claims to protect against health care fraud, while at the same time giving physicians and other providers a meaningful opportunity to challenge efforts by health plans to collect refund demands that in some cases may be inappropriately sought.

Legislative history

S.7285 of 2004; Advanced to Third Reading S.2377 of 2005; Referred to Senate Insurance Committee S.32 of 2007-2006: Referred to Insurance S.311 of 2009-2010; Referred to Insurance

Fiscal implications

None.

Effective date

60 days after becoming a law.