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

                                  3341

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            January 27, 2009
                               ___________

Introduced  by  M. of A. BRADLEY, FIELDS, BALL, DelMONTE, LIFTON, ENGLE-
  BRIGHT, ALESSI, LANCMAN -- Multi-Sponsored by --  M.  of  A.  BOYLAND,
  KOON,  McENENY,  PHEFFER,  SWEENEY  --  read  once and referred to the
  Committee on Insurance

AN ACT to amend the insurance law, in relation to the rights  of  health
  care  providers under managed care contracts, to rules relating to the
  processing of health claims, and to alleged overpayments to physicians

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Subsection (a) of section 3224-a of the insurance law, as
amended by chapter 666 of the laws  of  1997,  is  amended  to  read  as
follows:
  (a)  Except  in a case where the obligation of an insurer or an organ-
ization or corporation licensed TO WRITE ACCIDENT OR HEALTH INSURANCE OR
LICENSED or certified pursuant to article forty-three of this chapter or
article forty-four of the public health law to pay a claim submitted  by
a  policyholder or person covered under such policy or make a payment to
a health care provider is not reasonably  clear,  or  when  there  is  a
reasonable  basis supported by specific information available for review
by the superintendent that such claim or bill for health  care  services
rendered  was  submitted  fraudulently,  such insurer or organization or
corporation shall pay the claim to a policyholder or covered  person  or
make a payment to a health care provider within [forty-five] THIRTY days
of  receipt  of a PAPER claim or bill for services rendered.  AN INSURER
OR AN ORGANIZATION OR CORPORATION LICENSED TO WRITE ACCIDENT  OR  HEALTH
INSURANCE  OR  LICENSED  OR CERTIFIED PURSUANT TO ARTICLE FORTY-THREE OF
THIS CHAPTER OR ARTICLE FORTY-FOUR OF THE PUBLIC HEALTH LAW  SHALL  MAKE
PAYMENT  WITHIN  FIFTEEN  DAYS  OF  RECEIPT FOR ELECTRONICALLY SUBMITTED
CLAIMS. A HEALTH CARE PROVIDER WHO SUBMITS CLAIMS  ELECTRONICALLY  SHALL
HAVE THE OPTION OF GETTING PAID ELECTRONICALLY.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03357-02-9

              

A. 3341                             2

  S  2.  Section 3224-b of the insurance law, as added by chapter 551 of
the laws of 2006, is amended to read as follows:
  S  3224-b.  Rules  relating  to THE RIGHTS OF PHYSICIANS UNDER MANAGED
CARE CONTRACTS, the  processing  of  health  claims  and  [overpayments]
PAYMENTS  to  physicians.  (a)  [Processing  of health care claims. This
subsection is intended to provide  uniformity  and  consistency  in  the
reporting of medical services and procedures as they relate to the proc-
essing  of  health care claims and is not intended to dictate reimburse-
ment policy] ALL AGREEMENTS BETWEEN HEALTH PLANS AND PHYSICIANS FOR  THE
DELIVERY  OF  MEDICAL SERVICES TO HEALTH PLAN BENEFICIARIES MUST CONTAIN
AND CONFORM TO THIS SECTION'S RULES WITH RESPECT TO THE RIGHTS OF PHYSI-
CIANS UNDER MANAGED CARE CONTRACTS.
  (1) For purposes of this section, a "health plan" shall be defined  as
an  insurer  that is licensed to write accident and health insurance, or
that is licensed pursuant to article forty-three of this chapter  or  is
certified pursuant to article forty-four of the public health law.
  (2)  ALL  CONTRACTS,  INCLUDING  AMENDMENTS THERETO, MUST BE SIGNED BY
BOTH PARTIES AND SHALL HAVE ATTACHED A COMPLETE FEE SCHEDULE APPROPRIATE
TO THE PHYSICIAN'S SPECIALTY.
  (3) NO CONTRACT MAY COMPEL THE PHYSICIAN TO PARTICIPATE IN ANY  FUTURE
PRODUCTS OFFERED BY THE PAYER.
  (4)  AN  INSURER  MAY  ONLY TERMINATE THE CONTRACT PRIOR TO THE AGREED
UPON DATE OF EXPIRATION ON A FOR CAUSE BASIS. REFUSAL TO SIGN A CONTRACT
AMENDMENT SHALL NOT BE DEEMED CAUSE FOR TERMINATION.
  (5) THERE SHALL BE A MINIMUM OF ONE HUNDRED FIFTY DAYS ADVANCED  WRIT-
TEN NOTICE OF A CONTRACT'S NON-RENEWAL.
  (6)  INSURERS  SHALL  PROVIDE PHYSICIANS WITH A MINIMUM OF NINETY DAYS
ADVANCED WRITTEN NOTICE OF CHANGES IN  POLICIES  AND  PROCEDURES  EXCEPT
WHERE  SUCH  POLICY  OR  PROCEDURE  CHANGE RESULTS IN A MATERIAL ADVERSE
IMPACT ON A PHYSICIAN'S ADMINISTRATIVE COSTS OR ON THE  INSURER'S  TOTAL
AGGREGATE  LEVEL  OF PAYMENT TO A PHYSICIAN, IN WHICH CASE SUCH A CHANGE
MAY ONLY BE EFFECTUATED THROUGH A CONTRACT AMENDMENT.
  (7) INSURERS MAY NOT ASSIGN, LEASE OR CONVEY RIGHTS IN A CONTRACT WITH
THE PHYSICIAN TO AN UNRELATED  PARTY  WITHOUT  THE  PHYSICIAN'S  WRITTEN
CONSENT  IN EACH INSTANCE OF SUCH PROPOSED ASSIGNMENT, LEASE, OR CONVEY-
ANCE UNLESS SUCH ASSIGNMENT, LEASE, OR CONVEYANCE IS TO A PARENT, AFFIL-
IATE, OR SUBSIDIARY CORPORATION OR TO A TRANSFEREE OF  ALL  OR  SUBSTAN-
TIALLY ALL OF SUCH INSURER'S ASSETS.
  (8)  INSURERS  SHALL INDEMNIFY A PHYSICIAN FOR ANY DAMAGES FOR MEDICAL
LIABILITY RESULTING FROM  THE  PHYSICIAN'S  COMPLIANCE  WITH  A  PAYER'S
UTILIZATION REVIEW DECISIONS.
  (9)  (A)  INSURERS  SHALL UTILIZE CURRENT ICD-9-CM DIAGNOSES CODES AND
CURRENT PROCEDURAL TERMINOLOGY (CPT) PROCEDURE CODES TO DESCRIBE  PHYSI-
CIAN SERVICES RENDERED FOR PROCESSING CLAIMS RELATED THERETO FOR PAYMENT
APPLYING  OFFICIAL  CODING RULES AND GUIDELINES INCLUDING THOSE APPLYING
TO BUNDLING AND UNBUNDLING OF CODES AND SERVICES.
  (B) Subject to  the  provisions  of  paragraph  [three]  TEN  of  this
subsection,  a  health  plan shall accept and initiate the processing of
all health care claims submitted by a physician pursuant to and consist-
ent with the current  version  of  the  American  medical  association's
current  procedural  terminology  (CPT)  codes, reporting guidelines and
conventions and the centers for medicare and medicaid  services  health-
care common procedure coding system (HCPCS) INCLUDING BUNDLED AND UNBUN-
DLED SERVICES.
  [(3)]  (10)  Nothing in this section shall preclude a health plan from
determining that any such claim is not eligible for payment, in full  or

A. 3341                             3

in part, based on a determination that: (i) the claim is not complete as
defined  by  11  NYCRR  217;  (ii) the service provided is not a covered
benefit under the contract or agreement, including but not limited to, a
determination  that such service is not medically necessary or is exper-
imental or investigational; (iii) the insured did not obtain a referral,
pre-certification or satisfy any other condition  precedent  to  receive
covered  benefits  from  the physician; (iv) the covered benefit exceeds
the benefit limits of the contract or agreement; (v) the person  is  not
eligible  for  coverage or is otherwise not compliant with the terms and
conditions of his or her contract; (vi) another insurer, corporation  or
organization  is  liable for all or part of the claim; or (vii) the plan
has a reasonable suspicion of fraud or abuse. [In addition,  nothing  in
this  section  shall  be deemed to require a health plan to pay or reim-
burse a claim, in full or in part, or dictate the amount of a  claim  to
be paid by a health plan to a physician.]
  [(4)] (11) Every health plan shall publish on its provider website and
in its provider newsletter the name of the commercially available claims
editing  software  product that the health plan utilizes and any signif-
icant edits, as determined by the health plan, added to the claims soft-
ware product after the effective date of this section, which are made at
the request of the health plan. The health plan shall also provide  such
information upon the written request of a physician who is a participat-
ing physician in the health plan's provider network.
  (b)  Overpayments to physicians. (1) Other than recovery for duplicate
payments, a health plan shall provide  thirty  days  written  notice  to
physicians  before  engaging  in additional overpayment recovery efforts
seeking recovery of the overpayment of claims to such  physicians.  Such
notice  shall  state  the  patient  name,  service date, payment amount,
proposed adjustment,  and  a  reasonably  specific  explanation  of  the
proposed adjustment.
  (2) A health plan shall not initiate overpayment recovery efforts more
than  twenty-four  months  after  the original payment was received by a
physician. Provided, however, that no such time  limit  shall  apply  to
overpayment recovery efforts which are: (i) based on a reasonable belief
of  fraud  or  other  intentional  misconduct,  or abusive billing, (ii)
required by, or initiated at the request of,  a  self-insured  plan,  or
(iii) required by a state or federal government program. Notwithstanding
the  aforementioned  time  limitations,  in  the  event that a physician
asserts that a health plan has underpaid a claim or claims,  the  health
plan may defend or set off such assertion of underpayment based on over-
payments  going  back  in  time  as far as the claimed underpayment. For
purposes of this paragraph, "abusive billing"  shall  be  defined  as  a
billing  practice which results in the submission of claims that are not
consistent with A PHYSICIAN'S sound fiscal, business, or  medical  prac-
tices  and at such frequency and for such a period of time as to reflect
a consistent course of conduct.  EVERY INSTANCE OF ALLEGED ABUSIVE BILL-
ING SHALL BE SUBSTANTIATED BY A REVIEW OF THE MEDICAL RECORD  PERTAINING
TO  EACH  CLAIM  FOR WHICH FINANCIAL RECOVERY IS SOUGHT. WHEN THERE IS A
DISPUTE BETWEEN AN INSURER AND PHYSICIAN OVER WHETHER  OR  NOT  A  CLAIM
CONSTITUTES ABUSIVE BILLING, IT SHALL BE REFERRED TO AND RESOLVED BY THE
INDEPENDENT  DISPUTE  RESOLUTION  REVIEW BOARD AS SPECIFIED IN PARAGRAPH
EIGHT OF THIS SUBSECTION. NOTWITHSTANDING ANY LIMITATIONS  WRITTEN  INTO
EXISTING  CONTRACTS  BETWEEN  AN INSURER AND A PHYSICIAN, PHYSICIANS MAY
OFFSET SUCH INSURER OVERPAYMENT  CLAIMS  WITH  INSTANCES  OF  DOCUMENTED
UNDERPAYMENT DURING THE PERIOD IN QUESTION.

A. 3341                             4

  (3)  [Nothing  in  this  section shall be deemed to limit an insurer's
right to pursue recovery of overpayments  that  occurred  prior  to  the
effective date of this section where the insurer has provided the physi-
cian with notice of such recovery efforts prior to the effective date of
this  section.]  ALL  CLAIMS  FOR ALLEGED OVERPAYMENTS SHALL BE BASED ON
AUDITS OF MEDICAL RECORDS FOR EACH CLAIM FOR  WHICH  AN  OVERPAYMENT  IS
ALLEGED AND MAY NOT BE EXTRAPOLATED FROM A SAMPLE OF CLAIMS.
  (4)  INSURERS  MAY  NOT  RECOUP  CLAIMED  OVERPAYMENTS  BY  OFFSETTING
REIMBURSEMENT OWED FOR SERVICES RENDERED TO OTHER PATIENTS.
  (5) WHERE THE INSURER HAS CONFIRMED THE  ELIGIBILITY  OF  A  PATIENT'S
COVERAGE  PRIOR  TO THE PROVISION OF SERVICES BY A PHYSICIAN WHO IN GOOD
FAITH RELIED UPON SUCH INSURER VERIFICATION, INSURER MAY NOT SUBSEQUENT-
LY SEEK FINANCIAL RECOVERY FROM A PHYSICIAN FOR SUCH  RENDERED  SERVICES
ON THE GROUNDS THAT THE PATIENT WAS NOT COVERED BY THE INSURER.
  (6) INSURERS SHALL PAY PHYSICIANS THE AVERAGE SALES PRICE (ASP) FORMU-
LA  ESTABLISHED  BY  THE  CENTERS FOR MEDICARE & MEDICAID SERVICES (CMS)
PURSUANT TO SECTION 1847A OF THE SOCIAL SECURITY ACT, FOR  THE  COST  OF
ACQUIRING  COVERED  VACCINES,  BIOLOGICALS, AND OTHER INJECTABLE MEDICA-
TIONS.
  (7) INSURERS SHALL NOT REDUCE THE  LEVEL  OF  ICD-9-CM/CPT  CODES  FOR
BILLED  COVERED SERVICES WITHOUT FIRST PERFORMING AN AUDIT REVIEW OF ALL
THE PERTINENT PATIENT MEDICAL RECORDS.
  (8) THE SUPERINTENDENT SHALL ESTABLISH AN INDEPENDENT  DISPUTE  RESOL-
UTION  REVIEW  BOARD  WITHIN  OR  UNDER  THE  AUSPICES OF THE DEPARTMENT
AUTHORIZED  TO  HEAR  AND  RESOLVE  INSURER-PHYSICIAN  BILLING  DISPUTES
BROUGHT BY EITHER THE INSURER OR THE PHYSICIAN. THE SUPERINTENDENT SHALL
ESTABLISH  A  CASE  ADMINISTRATION FEE TO COVER THE COST INCURRED BY THE
DISPUTE REVIEW BOARD (INCLUDING EXPERT ICD-9-CM/CPT CODING  CONSULTANTS)
IN  REVIEWING AND DECIDING A BILLING DISPUTE. THIS FEE IS TO BE BORNE BY
THE PARTY WHO LOSES THE DISPUTE DECISION.
  (9) INSURERS THAT SELL HEALTH SAVINGS ACCOUNTS PRODUCTS AS DEFINED  IN
26 USC 223 SHALL CREATE AND MAINTAIN AN INTERNET WEB SITE CONTAINING THE
LISTING  OF  INDIVIDUAL  COSTS OF PARTICULAR MEDICAL SERVICES AND PROCE-
DURES INCLUDING USUAL, CUSTOMARY AND REASONABLE CHARGES  FOR  PHYSICIANS
AND  HOSPITALS  REFERENCING  UPDATED CURRENT PROCEDURE TERMINOLOGY (CPT)
CODES AND SHALL MAKE AUTOMATED ACCESS TO CURRENT PATIENT HEALTH  SAVINGS
ACCOUNTS DEDUCTIBLE INFORMATION AVAILABLE TO PHYSICIANS AND PATIENTS.
  S  3.  This  act  shall take effect immediately and shall apply to all
contracts entered into, renewed (automatically or  otherwise),  modified
or amended on or after such date.