What's happening
This bill prohibits insurers and health maintenance organizations from requiring certain restrictive provisions in contracts with health care providers, increasing flexibility and transparency.
Why it matters
Limits anti-competitive contract practices. By banning clauses that require insurers to contract with every member of a provider group or place all providers in the same tier, the bill prevents large health systems from leveraging their size to dominate insurer networks, which could help control costs and promote fairer competition.
Enables benefit design for value. Insurers are allowed to use benefit designs (such as lower copays or deductibles) to steer patients toward higher-value providers, potentially improving care quality and reducing out-of-pocket costs for consumers.
Improves fee transparency. The bill prohibits contract clauses that block disclosure of provider fees and allowed amounts to patients and their providers, empowering consumers to make more informed health care choices and potentially encouraging price competition.
Addresses “most-favored-nation” clauses. By restricting these provisions—which require providers to give an insurer the best rate offered to any other payer—the bill aims to prevent dominant insurers from stifling price competition and innovation in the health care market.
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Who cares
Headline styles
Stop Unfair Insurance Clauses
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to insurance
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 Insurance Requirements
In Assembly Committee · Insurance · Sponsor Pamela J. Hunter
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
8207
IN SENATE
April 17, 2020
Introduced by Sen. BENJAMIN -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law and the public health law, in relation to prohibiting certain requirements in insurance contracts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 3217-b of the insurance law is amended by adding a new subsection (m) to read as follows:
(m)(1) No insurer that offers a managed care product or a comprehensive policy that utilizes a network of providers shall enter into a contract, written policy, written procedure or agreement with any health care provider that:
(A) Requires an insurer to include all members of a provider group, including medical practice groups and facilities, in its network of participating providers;
(B) Requires an insurer to place all members of a provider group, including medical practice groups and facilities, in the same network tier;
(C) Requires an insurer to include all members of a provider group, including medical practice groups and facilities, in all products offered by the insurer;
(D) Prohibits insurers from using benefit designs to encourage members to seek services from higher-value health care providers;
(E) Contains a most-favored-nation provision; provided, however, nothing in this section shall be construed to prohibit a health insurer and a provider from negotiating payment rates and performance-based contract terms that would result in the insurer receiving a rate that is as favorable, or more favorable, than the rates negotiated between a health care provider and another entity; and
(F) Limits the ability of the insurer or health care provider from disclosing fees for services or the allowed amounts to an insured or insured's health care provider.
(2) After January first, two thousand twenty-one, any contract, written policy, written procedure or agreement that contains a clause
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD15287-01-0
S. 8207 2
contrary to the provisions set forth in this section shall be null and void; provided, however, the remaining clauses of the contract shall remain in effect for the duration of the contract term.
§ 2. Section 4406 of the public health law is amended by adding a new subdivision 6 to read as follows:
6. (a) No health maintenance organization that offers a managed care product or a comprehensive policy that utilizes a network of providers shall enter into a contract, written policy, written procedure or agreement with any health care provider that:
(i) Requires an insurer to include all members of a provider group, including medical practice groups and facilities, in its network of participating providers;
(ii) Requires an insurer to place all members of a provider group, including medical practice groups and facilities, in the same network tier;
(iii) Requires an insurer to include all members of a provider group, including medical practice groups and facilities, in all products offered by the insurer;
(iv) Prohibits insurers from using benefit designs to encourage members to seek services from higher-value health care providers;
(v) Contains a most-favored-nation provision; provided, however, nothing in this section shall be construed to prohibit a health insurer and a provider from negotiating payment rates and performance-based contract terms that would result in the insurer receiving a rate that is as favorable, or more favorable, than the rates negotiated between a health care provider and another entity; and
(vi) Limits the ability of the insurer or health care provider from disclosing fees for services or the allowed amounts to an insured or insured's health care provider.
(b) After January first, two thousand twenty-one, any contract, written policy, written procedure or agreement that contains a clause contrary to the provisions set forth in this section shall be null and void; provided, however, the remaining clauses of the contract shall remain in effect for the duration of the contract term.
§ 3. This act shall take effect on January 1, 2021.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to prohibiting federal corpo- rate bailout recipients who engage in stock buybacks from receiving New York state tax credits
PURPOSE;
The legislation would ban anti-competitive hospital contracting prac- tices that create higher health care prices for consumers and employers
Read the full memo (747 words)
Summary of provisions
Section one amends the insurance law to prohibit health plans from entering into agreements or contracts with health care providers that
* Require the health plan to include all members of a provider group in its network; * Require the health plan to place all members of a provider group in the same network tier; * Require the health plan to include all members of a provider group in all of its products; * Forbid health plans from using benefit design to encourage consumers to seek services from higher-value health care providers; * Contain most-favored-nation provisions in which the provider will not give an equal or more favorable price to any other plan; or * Limit the ability of the health plans or provider from disclosing fees for services or the allowed amounts. Such provisions in existing contracts would become null and void effective January 1, 2021. Section two amends the public health law to prohibit health plans from entering into agreements or contracts with health care providers that
* Require the health plan to include all members of a provider group in its network; * Require the health plan to place all members of a provider group in the same network tier; * Require the health plan to include all members of a provider group in all of its products; * Forbid health plans from using benefit design to encourage consumers to seek services from higher-value health care providers; * Contain most-favored-nation provisions in which the provider will not give an equal or more favorable price to any other plan; or * Limit the ability of the health plans or provider from disclosing fees for services or the allowed amounts. Such provisions in existing contracts would become null and void effective January 1, 2021.
Section three provides the effective date.
Justification
According to multiple studies, the cost of health care in New York continues to exceed the national average, with increases in prices charged by provides as one of the major driver of rising health insur- ance premiums. According to the NY State Health Foundation's December 2016 report, Why are Hospital Prices Different? An Examination of New York Hospital Reimbursement, "a hospital's market leverage - its bargain power when negotiation with insurers - is a key factor in the prices a hospital can command," and "contract provisions between hospitals and insurers can hinder competition, product innovation, transparency, and cost containment strategies." To maintain access to health care for New Yorkers and support a competitive market for the industry, the report recommended barring certain contractual language from hospital/insurer contracts, and that policies could include the barring of confidentiali- ty language, anti-steering language, and language that hinders the abil- ity of the tiered network product to work efficiently.
This legislation builds upon the Foundation's recommendations and seeks to improve affordability for employers and consumers by prohibiting restrictive contracting language that create artificial barriers to promoting greater competition in the marketplace, increasing transparen- cy of health care costs, and providing more affordable options for employers and consumers.
As an example, "all-or-nothing" contracts require that if a health plan wants a contract with any provider or affiliate in a particular provider organization, it must contract with all providers in the system. Provid- er organizations use this type of provision to leverage the status of their must-have providers to demand high payment rates for the entire provider organization, including those providers in more competitive areas and specialties. Similarly, restrictive contract provisions some- times require that a health plan place all physicians, hospitals, and other facilities associated with the dominant provider system in the most favorable tier of providers.
This legislation provides an equitable balance for hospitals contracting with health plans and employer groups, by allowing for competition, fair negotiations, and ensure consumers benefits. The legislation would help address the issue of pricing fairness and access to affordable health care in the state as well as help ensure that New Yorkers are not subjected to unfair business practices that increase health insurance premiums.
Legislative history
This is a new bill.
Fiscal implications
None.
Effective date
This act shall take effect January 1, 2021.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.