Prohibits providers of health care benefits from denying claims for medically necessary services for failure to provide timely notice

Summary of provisions

Section one amends Insurance Law §3224-a to provide that an insurer, or an organization or corporation certified pursuant to Article 43 or 47 of this chapter, or Article 44 of the PHL shall not deny payment of claims for medically necessary services provided by a general hospital certi- fied pursuant to Article 28 of the PHL on the basis that the hospital did not timely notify such insurer, organization or corporation that the services had been provided. This section shall not preclude a hospital an insurer, organization or corporation from agreeing to requirements for timely notification that services have been provided, or agreeing to payment penalties for untimely notification; provided that any agreed to reduction in payment for claims for services which the hospital fails to timely notify shall not exceed 12% of the payment amount otherwise due from such insurer, organization or corporation, and a penalty shall not be imposed if the service was pre authorized or if the patient's insur- ance coverage was not known to the hospital until after the patient was discharged.

Section two amends Insurance Law §49l4(b)(1) to give an insured's health care provider four months to initiate an external appeal after the insured or the insured's health care provider receives notice from the health care plan, or such plan's utilization review agent if applicable, of a final adverse determination or denial, or after both the plan and the insured have jointly agreed to waive any internal appeal.

Section three amends PHL §4914(2)(a) to give an enrollee's health care provider four months to initiate an external appeal after the enrollee or the enrollee's health care provider shall receives notification from the health care plan, or such plan's utilization review agent if appli- cable, of a final adverse determination or denial, or after both the plan and the enrollee have jointly agreed to waive any internal appeal.

Section four provides that the act shall take effect to the 30th day after it shall become law.

Justification

Several insurers have implemented admission notification policies that subject hospitals to substantial financial penalties for the failure to timely notify them of a patient's admission. Generally, such policies require notification of inpatient admission within 24 hours. These poli- cies include reductions in reimbursement ranging from 50%-100% of what would have otherwise have been payable. These reductions can be imposed even when the insurer agrees that the services were medically necessary and when the services were preauthorized. The penalties imposed for the failure to comply with administrative notification policies are dispro- portionately severe. While hospitals agree that admission notification is helpful to enable an efficient and coordinated discharge, the 24 hour timeframe provided does not account for unforeseen delays. The denial or substantial reduction in payments for the failure to meet a 24 hour notification requirement is punitive and does not advance the intended purpose of requiring such notification. Insurers should not be able to deny reimbursement for medically necessary services solely on such tech- nical grounds.

In July 2011, Governor Cuomo enacted provisions conforming New York State Insurance Law to the requirements of the Patient Protection and Affordable Care Act (ACA). The ACA requires that patients be allowed four months from receiving an adverse coverage determination to file an external appeal. However, the ACA does not provide similar provisions for providers. Therefore, the changes made last year reflect the ACA's four-month timeframe for patient appeals only, not for provider appeals. This would provide for uniform external appeal timeframes.

Prior legislative history

New bill.

Fiscal implications

None.

Effective date

On the 30th day after its enactment.