Relates to denial of health insurance claims

1 Co-sponsor

• William J. Larkin Jr.

BILL NUMBER:S7071B

Title of bill

An act to amend the insurance law and the public health law, in relation to denial of claims

Purpose

This bill amends the insurance law and the public health law in order to address certain health plan practices and the changing marketplace.

Summary of provisions

Section 1 amends section 3217-b of the insurance law by adding a new subsection (j); section 2 amends section 4325 of the insurance law by adding a new subdivision (k); and section 3 of the bill amends section 4406-c of the public health law by adding a new subdivision 8. These amendments prevent insurers and health plans from denying payment to a general hospital for a claim for medically necessary inpatient services resulting from an emergency admission solely on the basis that the hospital did not timely notify the insurer or plan that the services had been provided.

Section 4 amends section 3224-a of the insurance law by adding a new subsection (i) to prevent unilateral coding adjustments.

Justification

This bill is intended to address certain health plan practices that result in unilateral reductions of payments and claims denials. This bill strikes a balance, as it preserves all health plan rights to review medical necessity, utilization of services, and claims payment processing but in a manner that provides fairness to providers as well as a remedy.

Sections 1 through 3 of the bill address technical denials to prevent insurers and health plans from denying payment to a hospital for a claim for medically necessary inpatient services resulting from an emergency admission solely on the basis that the hospital did not timely notify the insurer or plan that the services had been provided. Under this proposal, plans would be barred from denying medically necessary claims for inpatient services resulting from an emergency admission solely from a failure to notify. However, hospitals and plans could agree to reductions in payment for such claims for failure to timely notify as long as the reduction did not exceed the lesser of $2,000 or 12% of the payment amount otherwise due.

Section 4 of the bill prevents insurers and plans from down coding claims without reviewing a medical record. This would ensure that coding adjustment is not applied to a claim to a lower reimbursement level without the benefit of reviewing a medical record to assess the severity of services that were provided to a patient. Under this proposal, if a plan unilaterally down codes a claim, a provider would have the light to resubmit the claim within 30 days with the related medical record, which must be reviewed by the plan. The plan would be required to reprocess the claim based on the coding that is supported by the medical record and, if that results in an increase in payment, pay an interest penalty on the amount of any increase if the insurer

or plan failed to meet the prompt pay timeframes when reprocessing the claim.

Legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect on July first, two thousand thirteen.