Promotes transparency and equity in the utilization review process by ensuring that agents are independent, having no existing relationships with the reviewed entity

Summary of specific provisions

Section 1 amends section 4905 of the public health law by adding a new subsection (16) which further defines the list of prohibited practices by utilization review agents. Specifically, the bill provides that no utilization review agent may conduct a review of any entity in which it has a "material familial affiliation, a "material financial affiliation" or a "material professional affiliation."

Section 2 amends section 4905 insurance law by adding a new subdivision (n) which further defines the list of prohibited practices by utilization review agents. Specifically, the bill provides that no utilization review agent may conduct a review of any entity in which it has a "material familial affiliation, a "material financial affiliation" or a "material professional affiliation."

Section 3 provides that the bill will take effect immediately.

Justification

This legislation will promote transparency and equity in the utilization review process by ensuring that agents are independent, having no existing relationships with the reviewed entity.Therefore, all parties - both consumers and entities alike - will be assured that all determinations are impartial and related only to the facts at hand.

With the current status of the law, healthcare insurance carriers are put in the position where collusion with hospital providers may be taking place while they insist that all they are doing is negotiating to obtain the best possible rates for their customers. At a minimum, this practice should be prevented to avoid the appearance of impropriety so consumers can have confidence that they are not being cheated by the carriers.

The prevailing practice is for insurance carriers in New York to negotiate contracts with all of the major provider networks. These contracts include negotiated hospital rates which are then shown to their customers as proof that the customer is getting the best possible deal and the most "bang for the buck". The carriers do not advise customers about other language in the contracts. Specifically, carriers have been negotiating limitations on their ability to perform utilization review type activities. They will limit the number of cases that can be reviewed and place other restrictions on the process which serve to protect the provider. This can become a "quid pro quo"

for the provider reducing their rates in the negotiation. The providers know that any losses they incur through negotiating lower rates will be made up by limiting review.

Through this process, the carriers and providers effectively become partners. The carriers understand that if they were to challenge billings and services through the review process, their business partner will be weakened and will not offer them the same reduced rates in the next negotiation. This could cause them to lose customers who are shopping for better rates. This clearly creates the appearance of a financial and professional relationship with the providers that is not in the best interests of consumers. Creating limitations on reviews or otherwise colluding to avoid taking money back from your business partner causes consumers to pay for unnecessary services and to overpay for appropriate care.

A requirement that utilization and other healthcare type review can only be performed by independent groups who do not have a financial relationship with the providers will limit the possibility of conflicts of interest.

Prior legislative history

New Bill

Fiscal implications

None to the State.

Effective date

This act shall take effect immediately and deemed in full force April 1, 2014.