What's happening
This bill prohibits certain contract clauses in health insurance and HMO agreements, including lowest rate guarantees, referral restrictions, mandatory diagnosis disclosure, and non-generic drug substitutions.
Why it matters
Increased Provider Autonomy. By banning "lowest rate" contract clauses, the bill prevents insurers and HMOs from forcing health care providers to always give them the best price they offer to any other entity, which could help smaller providers negotiate fairer rates and reduce downward pressure on provider compensation.
Patient Choice and Continuity of Care. Prohibiting restrictions based solely on a provider’s network status allows doctors and other health care professionals to refer patients to the most appropriate specialists or facilities, rather than being limited by insurance networks, which can improve care quality and patient outcomes.
Enhanced Patient Privacy. The prohibition on mandatory disclosure of a patient’s diagnosis on prescriptions (unless required by law) strengthens medical privacy protections and may reduce the risk of sensitive health information being unnecessarily shared with insurers or pharmacists.
Preserving Clinical Judgment in Medication Decisions. By stopping insurers and managed care plans from allowing non-generic drug substitutions without the prescriber’s approval, the bill ensures that only the prescribing health care professional (or a pharmacist within strict guidelines) can change prescribed medications, supporting tailored patient care and reducing potential conflicts of interest.
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Who cares
Headline styles
Limit Health Plan Contract Clauses
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to health
- Referred to rules
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.
Ban Unfair Health Contract Clauses
Assembly Floor Calendar · Sponsor Richard Gottfried
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6858
2019-2020 Regular Sessions
IN SENATE
November 18, 2019
Introduced by Sen. SANDERS -- read twice and ordered printed, and when printed to be committed to the Committee on Rules
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 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)
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03359-03-9
S. 6858 2
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.
Sponsor's memo
Title of bill
An act to amend the public health law and the insurance law, in relation to certain contracts or agreements by health maintenance organizations
Purpose or general idea of bill
This legislation would prohibit or restrict a number of practices between HMOs and Health Care Providers.
Summary of specific provisions
This "bill adds four new subdivisions to section 4406-c of the Public Health Law. Subdivision 10 would prohibit the use of "most favored nation" clauses which arbitrarily lower reimbursement levels for the provision of health care services.
Read the full memo (660 words)
Subdivision 11 would ban the use of contract language which prohibits the ability of a physician to make referrals to other health care providers.
Subdivision 12 would ban contract language which mandates the provision of a patient's diagnosis on the written prescription as a condition for covering a prescription drug.
Subdivision 13 would prohibit insurers from mandating the substitution of a pharmaceutical agent (other than a generic equivalent) by any person other than the prescribing professional or a pharmacist with whom a prescribing physician has a collaboration agreement permitting substi- tution.
Section 2 of the bill makes the same changes to section 3217-b of the insurance Law.
Section 3 of the bill makes the same changes to section 4325 of the insurance Law.
Section 4 of the bill is the effective date.
Justification
Frequently, physicians and other health care providers provide health care to the uninsured and economically disadvantaged with very little or no compensation. Unfortunately, managed care insurance plans have created a disincentive to the provision of free and reduced cost care by inserting clauses into their contracts which requires a physician, or other health care provider, to accept reimbursement for a treatment/procedure at the lowest amount such provider has charged any entity for the same treatment. Consequently, if a physician wishes to only charge a nominal fee in a particular instance, that physician jeop- ardizes his or her reimbursement for all of his or her patients. Physi- cians, hospitals, and other providers should be allowed and encouraged to provide charity care without end angering the future of their prac- tices.
Insurance plans should not be permitted to control the referral process, which the treating physician uses to ensure that the patient is seen and treated by the mast appropriate medical professional. The issue of "in-network" or "out-of-network" providers should not be permitted to force treating physicians to refer to "in-network" providers only. While the plans may have different payment arrangements for in and out-of-net- work providers, an outright ban on out-of-network referrals is tanta- mount to a ban on the provision of sound medical advice.
Some plans require the provision of the patient's diagnosis, on the prescription, in order to consider coverage for the pharmaceutical drug. Not only is this practice a gross violation of patient privacy, but it serves to break the bonds of confidence between the patient and physi- cians and can place some patients in the awkward position of having to choose between receiving important medications and divulging personal health information. In addition, a growing number of insurance plans are arbitrarily requiring the substitution of "similar" pharmaceutical agents (as opposed to generic equivalents.) This can be at the expense of the patient's health, as the prescribing professional may have, in fact, chosen a certain agent because of a particular quality or certain circumstances or symptoms surrounding the patient's case. Only a treat- ing professional, with full knowledge of the patient's history, should have authority to change a patient's medication.
Prior legislative history
2002: A.10543 - advanced to third reading 2003-2004: A.3446 - passed Assembly 2005-2006: A.2204 - passed Assembly 2007-2008: A.4607-3 - passed Assembly 2009-2010: A.726-A - passed Assembly 2011-2012: A.594 - passed Assembly 2013-2014: A.4466-A - passed Assembly 2015-2016: A.2210 - advanced to third reading 2017-2018: A.2370-A - advanced to third reading
Fiscal implications
None
Effective date
This act shall take effect 180 days after it shall have become law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.