What's happening
This bill allows healthcare professionals and facilities to pay fair-market fees for practice management, billing, or health IT services, provided certain conditions are met.
Why it matters
Removes legal ambiguity for healthcare providers. The bill clarifies that healthcare professionals and facilities can pay third parties for management, billing, or health IT services—even if those fees are percentage-based or involve fee-splitting—so long as specific safeguards are followed, reducing the risk of professional misconduct charges for using such services.
Establishes strict boundaries to prevent kickbacks. The new language ensures that service providers who manage billing or IT cannot influence the amount charged or collected, nor can they refer patients or receive payment connected to patient referrals, thereby maintaining ethical boundaries and minimizing conflicts of interest.
Supports modernization and efficiency. By legally permitting fair-market-value payments for outsourced practice management and technology services, the bill may encourage more healthcare providers to adopt up-to-date billing and IT systems, potentially improving administrative efficiency and patient care.
Protects provider control over finances. The bill requires that all collected fees go directly to providers or their controlled accounts, ensuring that outside service companies do not gain financial control over healthcare professionals’ earnings.
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Who cares
Hospitals and other health care facilities
The bill would let them pay fair market value for practice management, billing or health information technology services through percentage-based fees, flat fees or other fee-sharing arrangements, subject to safeguards.
Physicians and other licensed health professionals
The bill would create exceptions to fee-splitting restrictions for these service payments while requiring collections to go directly to professionals or accounts under their sole control.
Practice management, billing and health IT companies
They could receive percentage-based compensation under the exceptions only if they are not responsible for the amount of patient-service fees charged and collected and do not refer patients to the provider.
Medical referral services
The bill would preserve the prohibition on hospital fee-splitting with referral services and exclude payments tied to patient referrals from the new exceptions.
Headline styles
Allow Fair Pay for Billing Services
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to health
- Returned to senate
- Died in assembly
- Referred to health
- Delivered to assembly
- Passed senateVote 62–0
- Advanced to third reading
- 2nd report cal.
- 1st report cal.409
- Referred to health
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Allow Fair Payment for Services
In Assembly Committee · Health · Sponsor David Buchwald
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2247
2017-2018 Regular Sessions
IN SENATE
January 12, 2017
Introduced by Sen. HANNON -- read twice and ordered printed, and when printed to be committed to the Committee on Health
AN ACT to amend the public health and education law, in relation to the provision of practice management, billing and health information technology services for healthcare facilities and professionals
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 2811 of the public health law, as added by chapter 776 of the laws of 1971 and as renumbered by chapter 649 of the laws of 1975, is amended to read as follows:
§ 2811. Discounts and splitting fees with medical referral services; prohibited. No hospital or facility delivering health care shall grant or receive a discount to or from any medical referral service or in any manner split fees with a medical referral service; provided, however, that nothing contained in this chapter shall prohibit such facilities or licensed professionals from paying a fair market value fee to any person or entity whose purpose is to perform practice management, billing or health information technology services based upon a percentage of fees billed or collected, a flat fee, or any other arrangement that directly or indirectly divides fees, for such purposes, provided that:
1. the person or entity providing practice management, billing or health information technology services is not responsible for the amount of fees charged and collected for the services rendered by such facility or licensed professional;
2. all charges collected are paid directly to the facility or to the licensed professional or are deposited directly into an account in the name of and under the sole control of the facility or licensed professional; and
3. the person or entity providing practice management, billing or health information technology services does not refer patients to the facility or licensed professional and that payments made are not related
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01574-01-7
S. 2247 2
to or compensating for the referral of patients to the facility or licensed professional.
§ 2. Section 6509-a of the education law, as amended by chapter 555 of the laws of 1993, is amended to read as follows:
§ 6509-a. Additional definition of professional misconduct; limited application. Notwithstanding any inconsistent provision of this article or of any other provision of law to the contrary, the license or registration of a person subject to the provisions of articles one hundred thirty-two, one hundred thirty-three, one hundred thirty-six, one hundred thirty-seven, one hundred thirty-nine, one hundred forty-one, one hundred forty-three, one hundred forty-four, one hundred fifty-six, one hundred fifty-nine and one hundred sixty-four of this chapter may be revoked, suspended or annulled or such person may be subject to any other penalty provided in section sixty-five hundred eleven of this article in accordance with the provisions and procedure of this article for the following:
That any person subject to the above enumerated articles, has directly or indirectly requested, received or participated in the division, transference, assignment, rebate, splitting or refunding of a fee for, or has directly requested, received or profited by means of a credit or other valuable consideration as a commission, discount or gratuity in connection with the furnishing of professional care, or service, including x-ray examination and treatment, or for or in connection with the sale, rental, supplying or furnishing of clinical laboratory services or supplies, x-ray laboratory services or supplies, inhalation therapy service or equipment, ambulance service, hospital or medical supplies, physiotherapy or other therapeutic service or equipment, artificial limbs, teeth or eyes, orthopedic or surgical appliances or supplies, optical appliances, supplies or equipment, devices for aid of hearing, drugs, medication or medical supplies or any other goods, services or supplies prescribed for medical diagnosis, care or treatment under this chapter, except payment, not to exceed thirty-three and one-third per centum of any fee received for x-ray examination, diagnosis or treatment, to any hospital furnishing facilities for such examination, diagnosis or treatment. Nothing contained in this section shall prohibit such persons from practicing as partners, in groups or as a professional corporation or as a university faculty practice corporation nor from pooling fees and moneys received, either by the partnerships, professional corporations, university faculty practice corporations or groups by the individual members thereof, for professional services furnished by any individual professional member, or employee of such partnership, corporation or group, nor shall the professionals constituting the partnerships, corporations or groups be prohibited from sharing, dividing or apportioning the fees and moneys received by them or by the partnership, corporation or group in accordance with a partnership or other agreement; provided that no such practice as partners, corporations or in groups or pooling of fees or moneys received or shared, division or apportionment of fees shall be permitted with respect to care and treatment under the workers' compensation law except as expressly authorized by the workers' compensation law. Nothing contained in this chapter shall prohibit a medical or dental expense indemnity corporation pursuant to its contract with the subscriber from prorationing a medical or dental expense indemnity allowance among two or more professionals in proportion to the services rendered by each such professional at the request of the subscriber, provided that prior to payment thereof such professionals shall submit both to the medical or dental expense indem-
S. 2247 3
nity corporation and to the subscriber statements itemizing the services rendered by each such professional and the charges therefor. Nothing contained in this chapter shall prohibit such professionals from paying a fair market value fee to any person or entity whose purpose is to perform practice management, billing or health information technology services based upon a percentage of fees billed or collected, a flat fee, or any other arrangement that directly or indirectly divides fees, for such purposes, provided that:
(1) the person or entity providing practice management, billing or health information technology services is not responsible for the amount of fees charged and collected for the services rendered by such professional;
(2) all charges collected are paid directly to the professional or are deposited directly into an account in the name of and under the sole control of the professional; and
(3) the person or entity providing practice management, billing or health information technology services does not refer patients to the professional and that payments made are not related to or compensating for the referral of patients to the professional.
§ 3. Subdivision 19 of section 6530 of the education law, as added by chapter 606 of the laws of 1991, is amended to read as follows:
19. Permitting any person to share in the fees for professional services, other than: a partner, employee, associate in a professional firm or corporation, professional subcontractor or consultant authorized to practice medicine, or a legally authorized trainee practicing under the supervision of a licensee. This prohibition shall include any arrangement or agreement whereby the amount received in payment for furnishing space, facilities, equipment or personnel services used by a licensee constitutes a percentage of, or is otherwise dependent upon, the income or receipts of the licensee from such practice, except as otherwise provided by law with respect to a facility licensed pursuant to article twenty-eight of the public health law or article thirteen of the mental hygiene law. Nothing contained in this chapter shall prohibit such professionals from paying a fair market value fee to any person or entity whose purpose is to perform practice management, billing or health information technology services based upon a percentage of fees billed or collected, a flat fee, or any other arrangement that directly or indirectly divides fees, for such purposes, provided that:
(a) the person or entity providing practice management, billing or health information technology services is not responsible for the amount of fees charged and collected for the services rendered by such professional;
(b) all charges collected are paid directly to the professional or are deposited directly into an account in the name of and under the sole control of the professional; and
(c) the person or entity providing practice management, billing or health information technology services does not refer patients to the professional and that payments made are not related to or compensating for the referral of patients to the professional.
§ 4. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the public health and education law, in relation to the provision of practice management, billing and health information technology services for healthcare facilities and professionals
Purpose
To allow hospitals and licensed professionals to pay a fee to vendors of practice management, billing or health information technology services based on a percentage of fees billed or collected, a flat fee, or any other arrangement, provided that the hospitals or licensed professionals (a) are responsible for the contents of claims submitted, (b) receive the third-party payments in their own name, and (3) do not receive referrals from the vendor.
Summary of provisions
Section 1 amends section 2811 of the Public Health Law to allow hospitals and licensed professionals to pay a fee to vendors of practice management, billing or health information technology services based on a percentage of fees billed or collected, a flat fee, or any other arrangement, provided that the facilities or professionals (1) are responsible for the contents of claims submitted, (2) receive third-party payments directly in their own name, and (3) do not receive referrals from the payee.
Read the full memo (1,051 words)
Section 2 amends section 6509-A of the Education Law to provide that it is not professional misconduct for licensed professionals to pay a fee to vendors of practice management, billing or health information technology services based on a percentage of fees billed or collected, a flat fee, or any other arrangement, provided that the licensed professionals (1) are responsible for the contents of claims submitted, (2) receive third-party payments directly in their own name, and (3) do not receive referrals from the payee.
Section 3 amends section 6530 of the Education Law to provide that it is not professional misconduct for a physician, physician assistant or specialist assistant to pay a fee to vendors of practice management, billing or health information technology services based on a percentage of fees billed or collected, a flat fee, or any other arrangement, provided that the physicians, physician assistants or specialist assistants (1) are responsible for the contents of claims submitted, (2) receive third-party payments directly in their own name, and (3) do not receive referrals from the payee.
Section 4 provides that this act would take effect immediately.
Justification
The bill would permit healthcare facilities and professionals in New York to contract for various practice management, billing and health information services on a percentage basis, as is already permitted in every other state, as long as certain conditions are satisfied.
Laws in many states, including New York, prohibit "fee-splitting." They are aimed primarily at situations where a healthcare professional, typically in order to generate patient referrals from other licensed or unlicensed persons, splits part of the professional fee earned from treating the referred patient with the source of the referral. This practice is potentially problematic because it can result in increasing the cost of healthcare, may lead to referring patients based on the economic return on the referral, rather than clinical appropriateness, and can generate excessive utilization
through the substitution of a financial motive for sound professional judgment.
New York is one of approximately two-thirds of the states that statutorily prohibit fee-splitting. Uniquely, however, the New York statute (and its consistent interpretation by regulators in New York) does not merely prohibit referral-related fee-splitting: the New York law also precludes any number of legitimate business arrangements commonly employed in the health care sector today that actually promote efficiency and quality by ensuring that the incentives of providers and vendors are properly aligned. New York's law prohibits accepted and customary business relationships that permit health care providers to efficiently outsource practice management and billing functions to those with appropriate expertise, and to compensate such vendors based on a percentage of reimbursement collection, which most accurately reflects the fair market value of the services rendered.
As a result, New York healthcare professionals, either knowingly or unknowingly, run the risk of being charged with professional misconduct by entering into agreements with national practice management, professional billing and health information technology vendors whose customary pricing practices are not consistent with the unique New York limitations. Alternatively, to do business in New York, some companies and professionals have opted to devise alternative arrangements for paying for billing services that are not based on the volume of billings, may not appropriately calculate the fair market value of the services provided and may actually have the effect of increasing health care costs in the long term.
This bill would allow such arrangements to be structured on a percentage basis, provided that the parties meet other requirements designed to eliminate the risks that the fee-splitting prohibition was intended to address. Specifically, vendors in percentage-based relationships may not be responsible for the content of claims, so that there is neither an incentive nor the opportunity to increase the amount of such claims beyond what is appropriate. In addition, providers must receive third-party payments directly in their own name and would pay the vendor the appropriate fee, rather than having the vendors actually receive the payments directly themselves. Finally, no referral may flow from the vendor to the provider, thereby eliminating the potential of payment for referral.
With these requirements, New York's fee-splitting law would remain among the most stringent. Twenty states have no fee-splitting prohibitions at all. Twenty-four states have adopted fee-splitting prohibitions that are narrowly designed to combat the abuses related to financially-driven referral practices. These statutes specifically target fees that are shared in return for referrals; about half of the statutes (11) only apply to fees shared between a referring physician and the physician to whom the referral was made, while the balance (13) apply to any person who might bring a patient to a particular physician in return for compensation from the physicians. None of the prohibitions in these states prohibit a physician from paying a percentage-based fee to a practice management, billing or health information technology company. Of the five remaining states, three have broad prohibitions against fee-splitting that nonetheless have been interpreted as not prohibiting percentage-based arrangements. The last two, California and Illinois, explicitly permit percentage-based arrangements, similar to what has been proposed in this bill.
Legislative history
2016: S.4736 - Passed Senate, died in Assembly
Fiscal implications
None.
Effective date
Immediate.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.