This bill has been amended

Bill S7071-2011

Relates to utilization review and denial of claims

Relates to denial of health insurance claims.

Details

Actions

  • May 22, 2012: REPORTED AND COMMITTED TO FINANCE
  • Apr 27, 2012: REFERRED TO HEALTH

Votes

VOTE: COMMITTEE VOTE: - Health - May 22, 2012
Ayes (12): Hannon, Ball, Farley, Fuschillo, Golden, Larkin, Young, Duane, Gianaris, Montgomery, Smith, Stewart-Cousins
Ayes W/R (4): Seward, Adams, Rivera, Peralta
Excused (1): McDonald

Memo

BILL NUMBER:S7071                REVISED 05/22/12

TITLE OF BILL: An act to amend the public health law and the insurance law, in relation to utilization review and denial of claims

PURPOSE: This bill amends the insurance and public health law in order to address certain health plan practices and the changing marketplace.

SUMMARY OF PROVISIONS: Sections 1 and 2 amend subdivision 7 of section 4903 of the public health law, and subsection (g) of section 4903 of the insurance law, to ensure that the failure of a utilization review agent to make a determination would represent an approved claim.

Section 3 amends section 3224-a of the insurance law by adding a new subsection (i) to prevent technical denials for compliant hospitals.

Section 4 amends subsection (b) of the insurance law to prevent unilateral coding adjustments.

Sections 5 and 6 amend subsection (1) of paragraph b of section 4914 of the insurance law, and paragraph (a) of subdivision 2 of section 4914 of the public health law, to extend the external appeal provider timeframe to conform with recent changes to related patient timeframes.

Sections 7 and 8 add a new paragraph (b) following the opening paragraph of subdivision 5 of section 4905 of the public health law, and a new paragraph 2 following the opening paragraph of subsection (e) of section 4905 of the insurance law, to require that utilization review agents substantiate pre-authorizations in writing.

Sections 9 and 10 amend paragraph (h) of subdivision 1 of section 4902 of the public health law, and paragraph B of subsection (a) of section 4902 of the insurance law, to ensure that common sense factors are considered in applying the prudent lay person standard.

JUSTIFICATION: This bill is intended to address certain health plan practices that result in unfair and unilateral reductions of payments and claims denials. This bill strikes a balance, as it preserves all health plan rights to review medical necessity, utilization of services, and claims payment processing but in a manner that provides fairness to providers and a remedy when certain health plans abuse or misapply existing policies.

New York State law establishes timeframes for utilization review agents to decide whether to pay a claim. If the deadline is missed,

the claim is considered to have received an adverse determination, i.e., payment is denied. At that point, the burden is on the provider who must expend time and additional resources appealing the plan's silence. Sections I and 2 of this bill specify that plan silence, in response to a submitted claim, is an approved claim rather than a denied claim.

Section 3 of this bill addresses technical denials for hospitals that substantially comply with plan policies and procedures and adopts the approach that is taken by the largest national health plan for compliant hospitals. While certain administrative rules serve an important role in managed care, hospitals that comply with these rules 90% of the time should not be financially penalized if they provided medically appropriate, covered services. Plans would still have the right to review all claims for medical necessity.

Section 4 prevents plans from downcoding claims without having reviewed a medical record. Plans will often adjust the coding applied to a claim to a lower reimbursement level without the benefit of reviewing a medical record to assess the severity of services that were provided to a patient. Under this provision, if a provider disputes a plan's attempt to downcode, it would be allowed to resubmit the claim with a medical record for review. If a plan upholds its determination to downcode, it would need to provide the basis for doing so. The provider would then have the right to appeal the claim. This process is tied to the existing prompt pay law.

Sections 5 and 6 conform and harmonize the timeframes for providers and patients/patients' designees to submit external appeals. Legislation was enacted last year that codified New York's external appeal law with the standards in the Patient Protection and Affordable Care Act. The timeframe for patients or patients' designees to submit an appeal to the Department of Financial Services was extended from 45 days to four months. Providers' timeframe for an external appeal remains 45 days.

Sections 7 and 8 would require utilization review agents to substantiate pre-authorizations in writing. Chapter 451 of 2007 requires a managed care organization to pay for care that it preauthorized (with limited exceptions). However, there is no requirement that pre-authorizations be provided in writing. In many cases, providers receive the pre-authorization verbally. This section requires verbal pre-authorizations to be confirmed in writing by email, fax or posting on a website to avoid confusion and extra administrative follow-up.

Sections 9 and 10 require plans to consider certain common sense factors in applying the prudent layperson standard when determining if the medical care provided was for an emergency condition. These provisions require a plan to consider the time of day and the day of the week the patient presented to the emergency department, in

addition to the presenting symptoms and severity of symptoms when reviewing coverage of emergency services.

LEGISLATIVE HISTORY: New Bill.

FISCAL IMPLICATIONS: None to the State.

EFFECTIVE DATE: This act shall take effect on July first, two thousand thirteen, provided however that section 3 shall apply to all policies and contracts issued, renewed, modified, altered or amended on and after such effective date.


Text

STATE OF NEW YORK ________________________________________________________________________ 7071 IN SENATE April 27, 2012 ___________
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 law and the insurance law, in relation to utilization review and denial of claims THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 7 of section 4903 of the public health law, as added by chapter 586 of the laws of 1998, is amended to read as follows: 7. Failure by the utilization review agent to make a determination within the time periods prescribed in this section shall be deemed to be an [adverse determination subject to appeal pursuant to section forty nine hundred four of this title] APPROVAL. S 2. Subsection (g) of section 4903 of the insurance law, as added by chapter 586 of the laws of 1998, is amended to read as follows: (g) Failure by the utilization review agent to make a determination within the time periods prescribed in this section shall be deemed to be an [adverse determination subject to appeal pursuant to section four thousand nine hundred four of this title] APPROVAL. S 3. Section 3224-a of the insurance law is amended by adding a new subsection (i) to read as follows: (I)(1) NOTWITHSTANDING ANY INCONSISTENT PROVISION OF SUBSECTION (B) OF THIS SECTION, AN INSURER OR ORGANIZATION OR CORPORATION LICENSED OR CERTIFIED PURSUANT TO ARTICLE FORTY-THREE OR ARTICLE FORTY-SEVEN OF THIS CHAPTER OR ARTICLE FORTY-FOUR OF THE PUBLIC HEALTH LAW SHALL NOT DENY PAYMENT FOR A CLAIM SUBMITTED BY A GENERAL HOSPITAL CERTIFIED PURSUANT TO ARTICLE TWENTY-EIGHT OF THE PUBLIC HEALTH LAW ON THE BASIS OF AN ADMINISTRATIVE OR TECHNICAL DEFECT, PROVIDED THAT AT LEAST NINETY PERCENT OF THE CLAIMS OTHERWISE SUBMITTED BY THE GENERAL HOSPITAL TO THAT INSURER OR ORGANIZATION OR CORPORATION IN THE PREVIOUS CALENDAR YEAR HAD NO ADMINISTRATIVE OR TECHNICAL DEFECT. FOR PURPOSES OF THIS SECTION, ADMINISTRATIVE OR TECHNICAL DEFECT MEANS FAILURE TO FOLLOW CONTRACTED PROCEDURES IN ACCESSING SERVICES, INCLUDING, BUT NOT LIMITED TO, FAILURE TO REQUEST APPROPRIATE OR NECESSARY AUTHORIZATION OF AN ADMISSION OR PROVISION OF SERVICES AND FAILURE TO PROVIDE PROPER NOTIFI-
CATION OF AN ADMISSION OR THE PROVISION OF SERVICES. THE INSURER OR ORGANIZATION OR CORPORATION SHALL LIMIT ITS REVIEW OF SUCH CLAIMS TO MEDICAL NECESSITY PURSUANT TO ARTICLE FORTY-NINE OF THIS CHAPTER OR ARTICLE FORTY-NINE OF THE PUBLIC HEALTH LAW. IF THE CLAIM IS FOUND TO BE MEDICALLY NECESSARY, THE INSURER OR ORGANIZATION OR CORPORATION SHALL PROCESS THE CLAIM PURSUANT TO THIS SECTION. NOTHING IN THIS SUBSECTION SHALL BE DEEMED TO PRECLUDE A GENERAL HOSPITAL AND AN INSURER OR ORGAN- IZATION OR CORPORATION FROM AGREEING TO A PERCENTAGE LESS THAN NINETY PERCENT. (2) FOR CLAIMS SUBMITTED BY A GENERAL HOSPITAL CERTIFIED PURSUANT TO ARTICLE TWENTY-EIGHT OF THE PUBLIC HEALTH LAW WITH AN ADMINISTRATIVE OR TECHNICAL DEFECT AND THAT ARE SUBJECT TO AN ADMINISTRATIVE OR TECHNICAL DENIAL, THE INSURER OR ORGANIZATION OR CORPORATION LICENSED OR CERTIFIED PURSUANT TO ARTICLE FORTY-THREE OR ARTICLE FORTY-SEVEN OF THIS CHAPTER OR ARTICLE FORTY-FOUR OF THE PUBLIC HEALTH LAW SHALL PROVIDE WRITTEN NOTICE TO THE GENERAL HOSPITAL STATING THE GENERAL HOSPITAL HAD FAILED TO COMPLY WITH THE NINETY PERCENT STANDARD SET FORTH IN PARAGRAPH ONE OF THIS SUBSECTION IN THE PRIOR YEAR AND IS THEREFORE SUBJECT TO A DENIAL BASED ON AN ADMINISTRATIVE OR TECHNICAL DEFECT. THE NOTICE MUST ALSO IDENTIFY THE SPECIFIC ADMINISTRATIVE AND/OR TECHNICAL DEFECT THAT RESULTED IN THE CLAIM'S DENIAL. S 4. Subsection (b) of section 3224-a of the insurance law, as amended by chapter 237 of the laws of 2009, is amended to read as follows: (b) In a case where the obligation of an insurer or an organization or corporation licensed or certified pursuant to article forty-three or forty-seven of this chapter or article forty-four of the public health law to pay a claim or make a payment for health care services rendered is not reasonably clear due to a good faith dispute regarding the eligi- bility of a person for coverage, the liability of another insurer or corporation or organization for all or part of the claim, the amount of the claim, the benefits covered under a contract or agreement, or the manner in which services were accessed or provided, an insurer or organ- ization or corporation shall pay any undisputed portion of the claim in accordance with this subsection and notify the policyholder, covered person or health care provider in writing within thirty calendar days of the receipt of the claim: (1) that it is not obligated to pay the claim or make the medical payment, stating the specific reasons why it is not liable; or (2) to request all additional information needed to determine liabil- ity to pay the claim or make the health care payment. IF THE SPECIFIC REASON PROVIDED IN ACCORDANCE WITH PARAGRAPH ONE OF THIS SUBSECTION FOR FAILURE TO PAY THE FULL CLAIM AS SUBMITTED IS THE ADJUSTMENT OF A PARTICULAR CODING TO A PATIENT INCLUDING THE ASSIGNMENT OF DIAGNOSIS AND PROCEDURE, THE HEALTH CARE PROVIDER MAY RESUBMIT THE AFFECTED CLAIM OR BILL FOR HEALTH CARE SERVICES WITH THE RELATED MEDICAL RECORD, WHICH MUST BE REVIEWED BY THE INSURER OR THE ORGANIZATION OR CORPORATION LICENSED OR CERTIFIED PURSUANT TO ARTICLE FORTY-THREE OR FORTY-SEVEN OF THIS CHAPTER OR ARTICLE FORTY-FOUR OF THE PUBLIC HEALTH LAW. Upon receipt of the information requested in paragraph two of this subsection, or THE MEDICAL RECORD OR an appeal of a claim or bill for health care services denied pursuant to paragraph one of this subsection, an insurer or organization or corporation licensed or certi- fied pursuant to article forty-three or forty-seven of this chapter or article forty-four of the public health law shall comply with subsection (a) of this section. NOTWITHSTANDING ANY INCONSISTENT PROVISION OF ARTICLE FORTY-NINE OF THE PUBLIC HEALTH LAW, ARTICLE FORTY-NINE OF THIS
CHAPTER, OR ANY OTHER PROVISION OF LAW, IF THE DISPUTED PORTION OF A CLAIM IS DENIED AFTER RESUBMISSION AND REVIEW OF THE MEDICAL RECORD PURSUANT TO THIS SUBSECTION DUE TO THE ADJUSTMENT OF A PARTICULAR CODING TO A PATIENT INCLUDING THE ASSIGNMENT OF DIAGNOSIS AND PROCEDURE, THE HEALTH CARE PROVIDER MAY SUBMIT AN EXTERNAL APPEAL TO BE PROCESSED IN ACCORDANCE WITH SECTION FOUR THOUSAND NINE HUNDRED FOURTEEN OF THE PUBLIC HEALTH LAW OR SECTION FOUR THOUSAND NINE HUNDRED FOURTEEN OF THIS CHAPTER. S 5. Paragraph 1 of subsection (b) of section 4914 of the insurance law, as amended by chapter 219 of the laws of 2011, is amended to read as follows: (1) The insured shall have four months to initiate an external appeal after the insured receives notice from the health care plan, or such plan's utilization review agent if applicable, of a final adverse deter- mination or denial, or after both the plan and the insured have jointly agreed to waive any internal appeal, or after the insured is deemed to have exhausted or is not required to complete any internal appeal pursu- ant to section 2719 of the Public Health Service Act, 42 U.S.C. S 300gg-19. Where applicable, the insured's health care provider shall have [forty-five days] FOUR MONTHS to initiate an external appeal after the insured or the insured's health care provider, as applicable, receives notice from the health care plan, or such plan's utilization review agent if applicable, of a final adverse determination or denial or after both the plan and the insured have jointly agreed to waive any internal appeal. Such request shall be in writing in accordance with the instructions and in such form prescribed by subsection (e) of this section. The insured, and the insured's health care provider where applicable, shall have the opportunity to submit additional documenta- tion with respect to such appeal to the external appeal agent within the applicable time period above; provided however that when such documenta- tion represents a material change from the documentation upon which the utilization review agent based its adverse determination or upon which the health plan based its denial, the health plan shall have three busi- ness days to consider such documentation and amend or confirm such adverse determination. S 6. Paragraph (a) of subdivision 2 of section 4914 of the public health law, as amended by chapter 219 of the laws of 2011, is amended to read as follows: (a) The enrollee shall have four months to initiate an external appeal after the enrollee receives notice from the health care plan, or such plan's utilization review agent if applicable, of a final adverse deter- mination or denial or after both the plan and the enrollee have jointly agreed to waive any internal appeal, or after the enrollee is deemed to have exhausted or is not required to complete any internal appeal pursu- ant to section 2719 of the Public Health Service Act, 42 U.S.C. S 300gg-19. Where applicable, the enrollee's health care provider shall have [forty-five days] FOUR MONTHS to initiate an external appeal after the enrollee or the enrollee's health care provider, as applicable, receives notice from the health care plan, or such plan's utilization review agent if applicable, of a final adverse determination or denial or after both the plan and the enrollee have jointly agreed to waive any internal appeal. Such request shall be in writing in accordance with the instructions and in such form prescribed by subdivision five of this section. The enrollee, and the enrollee's health care provider where applicable, shall have the opportunity to submit additional documenta- tion with respect to such appeal to the external appeal agent within the
applicable time period above; provided however that when such documenta- tion represents a material change from the documentation upon which the utilization review agent based its adverse determination or upon which the health plan based its denial, the health plan shall have three busi- ness days to consider such documentation and amend or confirm such adverse determination. S 7. Subdivision 5 of section 4905 of the public health law, as added by chapter 705 of the laws of 1996, is amended to read as follows: 5. (A) If a health care service has been specifically pre-authorized or approved for an enrollee by a utilization review agent, a utilization review agent shall not, pursuant to retrospective review, revise or modify the specific standards, criteria or procedures used for the utilization review for procedures, treatment and services delivered to the enrollee during the same course of treatment. (B) WHENEVER A UTILIZATION REVIEW AGENT MAKES A VERBAL REPRESENTATION REGARDING PREAUTHORIZATION OR APPROVAL, THE UTILIZATION REVIEW AGENT SHALL IMMEDIATELY, BUT NO LATER THAN, WITHIN ONE BUSINESS DAY SUPPLY THE PROVIDER WITH A WRITTEN CONFIRMATION OF THE APPROVAL BY EITHER: (I) SENDING A COPY OF SUCH APPROVAL THROUGH ELECTRONIC MAIL TO AN ADDRESS SPECIFIED BY THE PROVIDER; (II) SENDING A COPY OF SUCH APPROVAL THROUGH FACSIMILE TRANSMISSION TO A NUMBER SPECIFIED BY THE PROVIDER; OR (III) POSTING A COPY OF SUCH APPROVAL ON A SPECIFIC WEBPAGE OF THE INSURER'S WEBSITE TO WHICH THE PROVIDER HAS BEEN DIRECTED AND TO WHICH THE PROVIDER HAS BEEN GIVEN ACCESS SO THAT THE PROVIDER MAY IMMEDIATELY PRINT AND RETAIN A HARD COPY. S 8. Subsection (e) of section 4905 of the insurance law, as added by chapter 705 of the laws of 1996, is amended to read as follows: (e) (1) If a health care service has been specifically preauthorized or approved for an insured by a utilization review agent, a utilization review agent shall not pursuant to retrospective review revise or modify the specific standards, criteria or procedures used for the utilization review for procedures, treatment and services delivered to the insured, during the same course of treatment. (2) WHENEVER A UTILIZATION REVIEW AGENT MAKES A VERBAL REPRESENTATION REGARDING PREAUTHORIZATION OR APPROVAL, THE UTILIZATION REVIEW AGENT SHALL IMMEDIATELY, BUT NO LATER THAN, WITHIN ONE BUSINESS DAY SUPPLY THE PROVIDER WITH A WRITTEN CONFIRMATION OF THE APPROVAL BY EITHER: (A) SENDING A COPY OF SUCH APPROVAL THROUGH ELECTRONIC MAIL TO AN ADDRESS SPECIFIED BY THE PROVIDER; (B) SENDING A COPY OF SUCH APPROVAL THROUGH FACSIMILE TRANSMISSION TO A NUMBER SPECIFIED BY THE PROVIDER; OR (C) POSTING A COPY OF SUCH APPROVAL ON A SPECIFIC WEBPAGE OF THE INSURER'S WEBSITE TO WHICH THE PROVIDER HAS BEEN DIRECTED AND TO WHICH THE PROVIDER HAS BEEN GIVEN ACCESS SO THAT THE PROVIDER MAY IMMEDIATELY PRINT AND RETAIN A HARD COPY. S 9. Paragraph (h) of subdivision 1 of section 4902 of the public health law, as added by chapter 705 of the laws of 1996, is amended to read as follows: (h) Establishment of a requirement that emergency services rendered to an enrollee shall not be subject to prior authorization nor shall reimbursement for such services be denied on retrospective review; provided, however, that such services are medically necessary to stabi- lize or treat an emergency condition. IN REVIEWING WHETHER EMERGENCY SERVICES ARE MEDICALLY NECESSARY TO STABILIZE OR TREAT AN EMERGENCY
CONDITION, THE UTILIZATION REVIEW AGENT SHALL TAKE THE FOLLOWING FACTORS INTO CONSIDERATION: (I) THE TIME OF DAY AND DAY OF THE WEEK THE CARE WAS PROVIDED; (II) THE PRESENTING SYMPTOMS, INCLUDING BUT NOT LIMITED TO, SEVERE PAIN, TO ENSURE THAT THE DECISION TO DENY REIMBURSEMENT FOR EMERGENCY SERVICE IS NOT MADE SOLELY ON THE BASIS OF THE FINAL DIAGNOSIS. S 10. Paragraph 8 of subsection (a) of section 4902 of the insurance law, as added by chapter 705 of the laws of 1996, is amended to read as follows: (8) Establishment of a requirement that emergency services rendered to an insured shall not be subject to prior authorization nor shall reimbursement for such services be denied on retrospective review; provided, however, that such services are medically necessary to stabi- lize or treat an emergency condition. IN REVIEWING WHETHER EMERGENCY SERVICES ARE MEDICALLY NECESSARY TO STABILIZE OR TREAT AN EMERGENCY CONDITION, THE UTILIZATION REVIEW AGENT SHALL TAKE THE FOLLOWING FACTORS INTO CONSIDERATION: (A) THE TIME OF DAY AND DAY OF THE WEEK THE CARE WAS PROVIDED; (B) THE PRESENTING SYMPTOMS, INCLUDING BUT NOT LIMITED TO, SEVERE PAIN, TO ENSURE THAT THE DECISION TO DENY REIMBURSEMENT FOR EMERGENCY SERVICE IS NOT MADE SOLELY ON THE BASIS OF THE FINAL DIAGNOSIS. S 11. This act shall take effect July 1, 2013; provided, however, that section three of this act shall apply to all policies and contracts issued, renewed, modified, altered or amended on and after such effec- tive date.

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