Allows health insurers to offer out of network coverage outside of the health benefit exchange

Summary of provisions

Section one adds a new Public Health Law § 4403(9) to provide that notwithstanding any rule or regulation to the contrary, an HMO may offer out-of-network coverage outside the New York State of Health Marketplace, regardless of whether such coverage is offered in the Marketplace.

Sections two and three amend Insurance Law §§ 3217-e & 4306-d to make the aforementioned change applicable to insurers and non-profit medical and dental indemnity or health and hospital service corporations.

Section three provides that this act shall take effect immediately.

Justification

On January 31, 2013, the Department of Health released the invitation to insurers to participate in the Health Benefit Exchange, also known as the New York State of Health Marketplace, when it went live on January 1, 2014. Among many other requirements, the invitation provided that "a Health Insurer Applicant that offers an out-of-network product outside the Exchange in a county, must also offer an out-of-network product through the Exchange in that same county." The stated intent of this requirement was to ensure consumers had the same array of choices inside the Exchange as they would have outside the Exchange. While a very laudable goal, the consequence has been that most insurers on the individual market chose not to offer out-of- network coverage. Insurers faced concerns that competitors would not offer out-of-network coverage leaving them to attract the sickest most costly patients if they did, opted to eliminate this optional coverage. In the individual market, this coverage remains an option in just a handful of counties, north of New York City. According to Health Care for All New York, New York is one of only three states where out-of-network coverage is not broadly available to in the individual market. In some areas of the state, this coverage is beginning to disappear from the small group market as well.

At the same time, changes in federal law required sole proprietors and married couples running their own business, to enroll in the individual market, where state law had previously included them under the small group definition. These changes combined resulted in a number of individuals having to switch to the individual market, where they were often paying more, without even having the option to purchase out-of-network coverage. Further compounding the situation,

recent reports find that many Exchange plans offer very limited networks.

Despite the Department of Health's February 26, 2014, Webinar on the 2015 health plan invitation, in which it stated, "2015: Invitation will include a requirement for out-of-network benefits, scope to be determined," the finalized invitation did not include this requirement. Instead the invitation requires applicants "that offer an out-of-network product outside the Marketplace must offer the out-of-network product on the Marketplace at the silver and platinum levels." However, to provide "consumers with an option to purchase such product should they chose to do so," the Department encourages insurers that do not offer an out-of-network product outside of the Exchange to offer an out-of-network product inside of the Exchange.

Under the 2015 invitation, an insurer is prohibited from providing an out-of-network product outside of the Exchange, unless they provide it inside of the Exchange. However, they can provide coverage within the Exchange, even if they do not provide it outside of the Exchange. Although the Department strongly encourages out-of-network products within the Exchange, it cites concerns with premium increases associated with requiring such coverage, and argues that due to recent changes in the budget regarding out-of-network coverage this requirement was not necessary. The SFY 2014-15 budget did include monumental legislation protecting consumers from surprise medical bills and excessive emergency room charges. In addition to the disclosure provisions, the definition of usual and customary costs, the workgroup established to look at availability and reimbursement of out-of-network coverage, and the dispute resolution process, the budget enhanced hold harmless provisions and expanded network adequacy provisions so that all insurers must cover out-of-network services at the same cost sharing if no in-network provider is available. However, the budget did NOT address access to out-of-network coverage on the individual market for those who want to purchase it so they can have access to the providers of their choice.

This legislation would override the rule created by the Exchange invitation, in so much as it would permit an insurer to offer out-of-network products outside of the Exchange even if such product is not available within the Exchange. Under the Exchange invitation the market outside the Exchange does not dictate the market inside, this bill would likewise provide that the market inside does not dictate the market outside of the Exchange. By completely delinking the Exchange and non-Exchange markets with regard to out-of-network coverage, this legislation will allow the Exchange, which has been one of the most successful in the country, to continue under its current framework, while also allowing for the existence of products in the market for those who want such coverage and choose to pay for it.

Legislative history

2014: S.7140

Fiscal implications

None.

Effective date

Immediately, and applies to contracts and policies issued, renewed, modified or amended on or after such date.