senate Bill S7071

Amended

Relates to denial of health insurance claims

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 27 / Apr / 2012
    • REFERRED TO HEALTH
  • 22 / May / 2012
    • REPORTED AND COMMITTED TO FINANCE
  • 13 / Jun / 2012
    • AMEND (T) AND RECOMMIT TO FINANCE
  • 13 / Jun / 2012
    • PRINT NUMBER 7071A
  • 18 / Jun / 2012
    • AMEND (T) AND RECOMMIT TO FINANCE
  • 18 / Jun / 2012
    • PRINT NUMBER 7071B
  • 21 / Jun / 2012
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 21 / Jun / 2012
    • ORDERED TO THIRD READING CAL.1474
  • 21 / Jun / 2012
    • SUBSTITUTED BY A9946B

Summary

Relates to denial of health insurance claims.

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Bill Details

See Assembly Version of this Bill:
A9946
Versions:
S7071
S7071A
S7071B
Legislative Cycle:
2011-2012
Law Section:
Public Health Law
Laws Affected:
Amd §§4903, 4914, 4905 & 4902, Pub Health L; amd §§4903, 3224-a, 4914, 4905 & 4902, Ins L
Versions Introduced in 2011-2012 Legislative Cycle:
A9946B, S7071, S7071A, A9946B, S7071, S7071A

Votes

12
0
12
Aye
0
Nay
4
aye with reservations
0
absent
1
excused
0
abstained
show Health committee vote details

Sponsor 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.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  7071

                            I N  S E N A T E

                             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-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD15258-01-2

S. 7071                             2

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

S. 7071                             3

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

S. 7071                             4

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

S. 7071                             5

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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