New York State has adopted legislation to address consumer complaints related to health insurance coverage and "surprise bills" for health care services performed by out-of-network physicians and providers. The statute is effective March 31, 2015 and will apply to policies issued or renewed, and health care services provided, after the effective date.

The critical statute provisions include:

• Network adequacy rules imposed on health benefits plans which are based on comprehensive provider networks (i.e. PPOs and EPOs) which were previously requirements only applied to HMOs and other managed care products.
• Coverage requirements for certain emergency and non-emergency services provided by an out-of-network physician or provider.
• Disclosure and notification requirements imposed on health care insurers, professionals and facilities to inform patients of network participation and anticipated out-of-pocket costs for non-emergency services.
• Payment requirements imposed upon insurers for services rendered by an out-of-network physician when the insured assigns benefits.
• New dispute resolution process for insurers, physicians, insured and patients to address charges greater than $600 for emergency services or a "surprise bill" for non-emergency services provided by an out-of-network physician.

The NYS Department of Financial Services released an Emergency Rule establishing standards for the Dispute Resolution Process effective April 1, 2015. There are significant conflicts between the statute and emergency rules, which will need to be addressed prior to adoption of a Final Rule, concerning: (i) application to an out-of-network provider; (ii) insurer payment obligations; (iii) and procedural rights and requirements. (available at http://www.dfs.ny.gov/legal/regulations/emergency/emergdfs.htm.)

The NYS Department of Financial Services has a bullet point summary on its website available at: http://www.dfs.ny.gov/consumer/hrights.htm.

This informational memo offers a summary of the pertinent provisions of the statute and a reference table of the requirements in relation to the specific type of provider or entity.

Insurance Coverage

(Amended) Sections 3217-a(a)(11) and 4324(a)(11) of the Insurance Law is amended to add a "geographically accessible" standard to the determination of the sufficiency of an insurer’s provider network to protect the rights of the insured to obtain a referral or preauthorization to treat with a provider outside of the insurer’s network in order to meet their health care needs.

(Amended) Section 4400 of the Public Health Law is amended to add a "geographically accessible" standard to the determination of the sufficiency of an HMO’s provider network to protect the rights of the insured to obtain a referral or preauthorization to treat with a provider outside of the insurer’s network in order to meet their health care needs.

Section 3217-d of the Insurance Law requires access to specialty care for insured under a comprehensive health insurance policy that utilizes a network of providers.

• (Amended) Section 3217-d(d) is added to require access to specialty care and rare disease services by an out-of-network provider at no additional cost to the insured beyond what the insured would otherwise pay for services received within the network if the insurer determines that it does not have a participating provider with appropriate training and experience to meet the particular health care needs of the insured, as well as grant the insured the right to an internal and external appeal upon an adverse determination by the utilization review agents.

(New) Under Section 3241(a) of the Insurance Law, if insurer or plan includes a network of health care providers, the statute imposes certain coverage requirements as follows:

• The Superintendent is required to review the adequacy of the network to render the health care services covered under the policy or contract upon initial approval or at least every three years and upon service area expansion.

(New) Under Section 3241(b) of the Insurance Law, if insurer or plan issues a comprehensive group or group remittance policy or contract, the statute imposes certain coverage requirements as follows:

• The option for out-of-network benefits must be made available with at least one option to cover no less than eighty percent (80%) of the usual and customary cost (after a co-insurance or deductible).
• If there is no network provider available to render the health care services covered under the policy or contract, upon request by the insured, at least one option for out-of-network benefits must be made available for no less than eighty percent (80%) of the usual and customary cost (after a co-insurance or deductible).
  • Upon request, the Superintendent may either (i) waive the requirement as an undue hardship upon the insurer or plan or (ii) permit a third-party operating in the same holding company system to satisfy the requirement.
• The term "usual and customary cost" is defined as the eightieth percentile (80%) of all charges for specific health care services as reported in a benchmarking database maintained by a nonprofit organization specified by the Superintendent. The Superintendent will likely designate the current benchmarking database maintained by FAIR Health, Inc. available at: http://www.fairhealth.org/DataSolution?sk=DATA%20SOLUTIONS.
• The section does not include coverage for certain emergency care services provided in hospital facilities or prehospital emergency medical services.

(New) Under Section 3241(c) of the Insurance Law, if insurer or plan covers emergency services and the insured receives such services from an out-of-network provider, the statute requires the insurer or plan to cover the out-of-network charges in a manner to ensure the insured does not incur any out-of-pocket costs greater than if the services were rendered by a participating provider. The statute limits the application of this section by exempting certain "emergency care services" in hospital facilities and prehospital emergency medical services.

Section 4306-c of the Insurance Law requires access to specialty care for insured under a comprehensive health insurance policy that utilizes a network of providers.

• (Amended) Section 4306-c(d) is added to require access to specialty care and rare disease services by an out-of-network provider at no additional cost to the insured beyond what the insured would otherwise pay for services received within the network if the insurer determines that it does not have a participating provider with appropriate training and experience to meet the particular health care needs of the insured, as well as grant the insured the right to an internal and external appeal upon an adverse determination by the utilization review agents.

(New) Section 28 of Part H of Chapter 60 of the Laws of 2014 establishes a Workgroup to convene for the purposes of examining and studying changes in the rules regarding the availability of out-of-network coverage and the out-of-network reimbursement rates, and to make recommendations for alternative rate methodologies in a report to be issued by January 1, 2016. The Workgroup will consist of (9) members to be appointed by the Governor and include representatives of health benefits plans, physicians and consumers.

Insurance Disclosure and Notice

Section 3217-a of the Insurance Law imposes disclosure and notice requirements upon all comprehensive health insurance policies; managed care health insurance policies; or any other health insurance contract or product deemed appropriate by the Superintendent.

Section 4324 of the Insurance Law imposes disclosure and notice requirements upon all comprehensive, expense-reimbursed contracts; managed care products; or any other health contract or product deemed appropriate by the Superintendent.

• (Amended) Sections 3217-a(a) and 4324 require the insurer to supply each insured, and upon request each prospective insured prior to enrollment, written disclosure of certain information, which may be incorporated into the insurance contract or certificate. The statute imposes pertinent revisions and additions to such disclosure and notice requirements as follows:
  • Incorporate into the list of participating providers the name and contact information for any affiliations with participating hospitals.
  • Publish the list of all participating providers on the insurer’s website and update within (15) days of any participating providers and/or a change in a physician’s hospital affiliation.
  • Describe the method for a claim submission.
  • Provide a "clear description" of the method used by the insurer to determine the payment for out-of-network services, with examples of costs for frequently billed out-of-network services, and present the amounts as a percentage of the usual and customary cost for said service.
  • Maintains in writing and online information for the insured or prospective insured to estimate out-of-pocket costs for out-of-network services based on the difference between what the insurer will reimburse and the usual and customary cost for the health care service.
• (Amended) Sections 3217-a(b) and 4324(b) require the insurer to supply each insured or prospective insured, upon request, certain information. The statute imposes pertinent additions to such disclosure and notice requirements as follows:
  • Whether an identified provider scheduled to provide health care services is a participating provider.
  • The approximate amount the insurer will pay for an identified health care service, which is a non-binding amount and the insurer must notify the insured of said fact.
• (New) Sections 3217-a(f) and 4324(f) are added to define the term "usual and customary cost" as the eightieth percentile (80%) of all charges for specific health care services as reported in a benchmarking database maintained by a nonprofit organization specified by the Superintendent. The Superintendent will likely designate the current benchmarking database maintained by FAIR Health, Inc. available at: http://www.fairhealth.org/DataSolution?sk=DATA%20SOLUTIONS.

Provider Disclosure and Notice

(New) Section 23 of the Public Health Law is added to require physicians that are out-of-network with the insured’s plan to include a claim form with a patient bill for services. This requirement does not apply to a patient bill for cost sharing amounts (i.e. deductible, copayment and/or coinsurance).

(New) Section 24 of the Public Health Law is added to require certain health care providers and facilities to disclose certain information to existing and prospective patients as follows:

• Section 24(1) imposes disclosure and notice requirements upon health care professionals, diagnostic and treatment centers, and health centers. The provider or facility must disclose the health plan networks in which it is a participant and the hospitals with which it affiliates. This disclosure must be made both in writing (or a related website) prior to the provision of non-emergency services and verbally at the time the appointment is scheduled.
• Section 24(2) imposes disclosure and notice requirements upon health care professionals, diagnostic and treatment centers, and health centers if the provider or facility is not a participant in any health plan network. Prior to the provision of a non-emergency service, the provider or facility must notify the patient of the right to request, and provide in writing upon request, the estimated amount of that the patient will be billed for the anticipated health care services to be provided.
• Section 24(3) imposes disclosure and notice requirements upon a physician to provide the name, mailing address, and telephone number of any provider that the physician utilizes or coordinates with or refers the patient to perform "anesthesiology, laboratory, pathology, radiology or assistant surgeon services" in connection with care to be provided in the physician’s office. The notice must be made in to the patient at the time of referral to or coordination of such services. The statute does not indicate whether the notice must be made in writing or verbally.
• Section 24(4) imposes disclosure and notice requirements upon a physician to provide both the patient and hospital the name, mailing address, and telephone number of any other physician utilized to provide non-emergency services to the patient under a scheduled hospital admission or outpatient hospital service. The notice must be made at the time the service is scheduled and must include information on how to determine the health plan networks in which the physician participates. The statute does not indicate whether the notice must be made in writing or verbally.
• **Section 24(5) imposes disclosure and notice requirements upon a hospital to post on the hospital’s website the hospital’s standard charges for items and services.**
• Section 24(6) imposes disclosure and notice requirements upon a hospital to post on the hospital’s website the following information and statements:
  • The health plan networks in which the hospital participates;
  • The name, mailing address, and telephone number of any physician group practice that the hospital has contracted to provide services, with instructions on how to determine the health plan networks in which the physician group practice participates;
  • The name, mailing address, and telephone number of employed physicians and the health plan networks in which the physician participates;
  • The statements that: (i) the cost of physician services provided in the hospital are not included in the hospital’s standard charge; (ii) not all physicians providing services at the hospital participate in the same health plan network; and (iii) the patient should confirm the health plan networks in which the performing physician participates with the arranging physician.
• Section 24(7) imposes disclosure and notice requirements upon a hospital to include certain information and statements in the registration or admission materials for non-emergency services as follows:
  • The steps required to determine the physicians who are reasonably anticipated to perform the services, the health plan networks in which the physician participates, and whether the physician is employed by the hospital.
  • A statement that the patient should contact the arranging physician to obtain the name, practice name, mailing address, and telephone number of the performing physicians and whether such physician is employed by or contracted with the hospital to provide services.

Appeal Process and Dispute Resolution

(New) Section 4900(g-6-a) of the Insurance Law adds and defines the term "Out-of-network referral denial" related to a managed care product. The provision requires the insurer to include in the denial notice instructions related to what information is required to appeal the denial.

(Amended) Section 4903 of the Insurance Law sets forth the requirements under the utilization review process. The statute amends Section 4903(b) to add a requirement that the determination notice include the following information: (i) whether the services are considered in or out-of-network; (ii) whether the insured will be responsible for any out-of-pocket expense; (iii) the dollar amount the insurer will pay if out-of-network; and (iv) the method for determining out-of-pocket costs for out-of-network services based on the difference between what the insurer will reimburse and the usual and customary cost for the health care service.

(Amended) Section 4904 of the Insurance Law establishes the right and procedures to appeal adverse determinations by the insurer’s utilization review agent. The statute adds Section 4904(a-2) permitting the insured or a designee to appeal an Out-of-Network Referral Denial through the insured’s attending physician submitting a written statement that: (i) the attending physician is qualified to practice in the area related to the health service at issue; (ii) the participating provider recommended by the insurer is shown not to be properly qualified; and (iii) a qualified out-of-network provider is identified and available to render the health service at issue.

(Amended) Section 4910 of the Insurance Law establishes the right to file an external appeal related to a final adverse determination by the insurer’s utilization review agent. The statute adds Section 4910(b)(4) permitting the insured or a designee to appeal an Out-of-Network Referral Denial through the insured’s attending physician if he or she is qualified to practice in the area related to the health service at issue and submits a written certification that (i) asserts the participating provider recommended by the insurer is not properly qualified and (ii) identifies a qualified out-of-network provider is identified and available to render the health service at issue.

(Amended) Section 4914 of the Insurance Law establishes the procedures for external appeals of final adverse determinations. The statute adds Section 4914(b)(4)(D) establishing the procedures and standards of review related to an appeal through the insured’s attending physician submission of a written certification.

(New) Article 6 of the Financial Services Law is added to establish the rights and procedures for patients to resolve disputes related to a bill for emergency services or a surprise bill for non-emergency services provided by an out-of-network physician (or provider). The Superintendent of the Department of Financial Services is empowered to establish the dispute resolution process based on certain statutory review criteria and to certify independent dispute resolution entities. The Superintendent has issued an Emergency Rule to be effective April 1, 2015 and available at: http://www.dfs.ny.gov/legal/regulations/emergency/emergdfs.htm. The Department anticipates publishing a Final Rule after comments to the current Proposed Rule.

• The dispute resolution mandates do not apply to certain health care services, including emergency services, where physician fees are subject to schedules or other monetary limitations under any law (e.g. Workers’ Compensation, No-Fault).
• Certain CPT codes are exempt from the dispute resolution mandates, which must be posted on the NYS Department of Financial Services website.
• The insured and patients are held "harmless" from payment for certain physician services in particular circumstances. For example, if an insured assigns benefits in writing to an out-of-network physician who knows that the insured is insured under a health care plan, the non-participating physician may not bill the insured except for any applicable co-payment, coinsurance or deductible that would be owed if the physician was a participating provider.
• The statute imposes differing obligations and compensation formulas upon an insurer depending on whether the insured did or did not assign benefits to the out-of-network physician.
  • If the insured assigns benefits to a non-participating physician, the health care plan must:
    • Pay the billed amount; or
    • Attempt to negotiate reimbursement with the non-participating physician, and if unsuccessful, pay the amount the plan determines to be reasonable, except for the insured’s co-payment, coinsurance or deductible; and then
    • Either the insurer or non-participating physician may initiate the dispute resolution process.
    • If the insured does not assign benefits to a non-participating physician or the patient is not insured, the insured or patient may initiate the dispute resolution process without having to first pay the physician’s fee.
• The statute imposes liability on the parties involved for expenses related to the dispute resolution process depending on whether the patient is insured and the prevailing party.
• The definition of a "surprise bill" is limited to:
  • Services rendered by an out-of-network physician at a participating hospital or ambulatory surgical center where the participating physician is unavailable or the service is performed by an out-of-network physician without the insured’s knowledge or unforeseen medical services are required; or
  • Services rendered by an out-of-network physician at a hospital or ambulatory surgical center if the patient was not notified in accordance with Public Health Law §24; or
  • Services rendered by an out-of-network provider as a result of a participating physician referral without proper notice and patient consent of the out-of-network status. The Emergency Rules define a "referral" to an out-of-network provider as when: "(i) Health care services are performed by a non-participating health care provider in the participating physician’s office or practice during the course of the same visit; (ii) The participating physician sends a specimen taken from the patient in the participating physician’s office to a non-participating laboratory or pathologist; or (iii) For any other health care services performed by a non-participating health care provider, when referrals are required under the insured’s contract."