What's happening
This bill prohibits health plans and insurers from including certain price, referral, diagnosis disclosure, and non-generic drug substitution clauses in provider contracts.
Why it matters
Limits insurer leverage over provider pricing. By banning "most favored nation" clauses (which force providers to give insurers the lowest price offered to any other party), the bill could help prevent insurers from dictating or suppressing provider payment rates, potentially supporting fairer negotiations and competitive dynamics in healthcare markets.
Protects patient choice and provider autonomy. The bill prevents insurers from restricting referrals solely based on a provider’s network status, aiming to ensure that patients can be referred to the most appropriate specialist or facility for their needs, regardless of insurance arrangements.
Strengthens privacy protections. By barring insurers from requiring the disclosure of a patient’s diagnosis on prescriptions (unless legally required), the legislation seeks to safeguard sensitive health information and reduce the risk of unnecessary privacy breaches.
Restricts non-generic drug substitutions. The bill ensures that only the prescribing health care professional or a pharmacist (as allowed by law) can substitute prescribed drugs, other than generic equivalents. This could help prevent insurers or third parties from switching patients’ medications for cost reasons without appropriate clinical oversight, supporting continuity and safety in patient care.
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Who cares
Headline styles
Ban Unfair Health Contract Clauses
Plain English, a few words. Used as the page title.
Sponsors
8 Co-sponsors
History
- Amended on third reading 2983a
- Ordered to third reading cal.124
- Advanced to third reading cal.286
- Reported
- 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.
Limit Health Plan Contract Clauses
In Senate Committee · Health · Sponsor James Sanders Jr.
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2983--A Cal. No. 124
2019-2020 Regular Sessions
IN ASSEMBLY
January 28, 2019
Introduced by M. of A. GOTTFRIED, DINOWITZ, ENGLEBRIGHT, GALEF, PAULIN, CUSICK, L. ROSENTHAL, D'URSO, SAYEGH -- Multi-Sponsored by -- M. of A. CARROLL, COLTON, COOK, CYMBROWITZ, GLICK, GUNTHER, LIFTON, PERRY, RIVERA -- read once and referred to the Committee on Health -- ordered to a third reading, amended and ordered reprinted, retaining its place on the order of third reading
AN ACT to amend the public health law and the insurance law, in relation to certain contracts or agreements by health maintenance organizations
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 7 of section 4406-c of the public health law, as added by chapter 705 of the laws of 1996 and as renumbered by chapter 487 of the laws of 2010, is renumbered subdivision 15 and four new subdivisions 11, 12, 13 and 14 are added to read as follows:
11. No contract or agreement between a health care plan and a health care provider shall contain any clause which entitles such health care plan to reimburse the health care provider at the lowest price or rate that such health care provider has charged another person or entity for rendering the same treatment or performing the same procedure.
12. No health care plan shall by contract, written policy or written procedure prohibit any health care provider from referring a patient or enrollee to a health care provider based solely upon such health care provider's participation status with the managed care product subscribed to by the patient or enrollee.
13. No health care plan shall by contract, written policy or written procedure require the disclosure of an enrollee's diagnosis on a prescription as a condition for dispensing of a pharmaceutical drug or agent, unless otherwise required by law.
14. No health care plan shall by contract, written policy or procedure provide for or allow the substitution of a pharmaceutical drug or agent (other than a generic substitution) by any person other than the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03359-02-9
A. 2983--A 2
prescribing health care professional or by a pharmacist under section sixty-eight hundred one-a of the education law.
§ 2. Subsection (h) of section 3217-b of the insurance law, as relettered by chapter 237 of the laws of 2009, is relettered subsection (p) and four new subsections (h), (m), (n) and (o) are added to read as follows:
(h) No contract or agreement between an insurer and a health care provider shall contain any clause which entitles such insurer to reimburse the health care provider at the lowest price or rate that such health care provider has charged another person or entity for rendering the same treatment or performing the same procedure.
(m) No insurer shall by contract, written policy or written procedure prohibit any health care provider from referring an insured to a physician based solely upon such physician's participation status with the insurance product subscribed to by the insured.
(n) No insurer shall by contract, written policy or written procedure require the disclosure of an insured's diagnosis on a prescription as a condition for authorizing the coverage for or payment or dispensing of a pharmaceutical drug or agent, unless otherwise required by law.
(o) No insurer which maintains a drug formulary, or which contracts with another entity to maintain a drug formulary, shall by contract, written policy or procedure provide for or allow the substitution of a pharmaceutical drug or agent (other than a generic substitution) by any person other than the prescribing health care professional or by a pharmacist under section sixty-eight hundred one-a of the education law.
§ 3. Subsection (i) of section 4325 of the insurance law, as relettered by chapter 487 of the laws of 2010, is relettered subsection (q) and four new subsections (i), (n), (o) and (p) are added to read as follows:
(i) No contract or agreement between an insurer and a health care provider shall contain any clause which entitles such insurer to reimburse the health care provider at the lowest price or rate that such health care provider has charged another person or entity for rendering the same treatment or performing the same procedure.
(n) No insurer shall by contract, written policy or written procedure prohibit any health care provider from referring an insured to a physician based solely upon such physician's participation status with the insurance product subscribed to by the insured.
(o) No insurer shall by contract, written policy or written procedure require the disclosure of an insured's diagnosis on a prescription as a condition for authorizing the coverage for or payment or dispensing of a pharmaceutical drug or agent, unless otherwise required by law.
(p) No insurer which maintains a drug formulary, or which contracts with another entity to maintain a drug formulary, shall by contract, written policy or procedure provide for or allow the substitution of a pharmaceutical drug or agent (other than a generic substitution) by any person other than the prescribing health care professional or by a pharmacist under section sixty-eight hundred one-a of the education law.
§ 4. This act shall take effect on the one hundred eightieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
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