BILL NUMBER:A9739

TITLE OF BILL:  An act to amend the insurance law, in relation to
settlement of claims

PURPOSE OR GENERAL IDEA OF BILL:  This bill amends the insurance law
in relation to settlement of claims by requiring insurers and certain
other licensed or certified entities to pay a claim submitted by a
policyholder or person covered under such policy or to make a payment
to a health care provider within fifteen days of receipt of a claim or
a bill for services rendered which is transmitted electronically or
within thirty days of receipt of a claim or bill for services rendered
which is submitted in writing, subject to certain exceptions. This
amendment also increases the civil penalties for violating such
payment obligations and makes the imposition of a civil penalty
mandatory, after notice and a hearing.

SUMMARY OF SPECIFIC PROVISIONS:  Section one amends subsection (a) of
section 3224-a of the insurance law, as amended by chapter 666 of the
laws of 1997, to provide that except in a case where the obligation of
an insurer, an organization or a corporation licensed or certified
pursuant to article 43 of the insurance law or article 44 of the
public health law to pay a claim submitted by a policyholder or person
covered under such policy or to 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, organization or
corporation will pay the claim to a policyholder or covered person or
make a payment to a health care provider within fifteen days of
receipt of a claim or bill for services rendered which is transmitted
electronically or within thirty days of receipt of a claim or bill,
for services rendered which is submitted in writing.

Section two amends subsection (a) of section 2406 of the insurance
law, as amended by chapter 666 of the laws of 1997, to provide that if
the superintendent finds, after notice and hearing, that the person
complained of has engaged in an act prohibited by section 3224-a of
the insurance law, the superintendent shall levy a civil penalty
against such person in an amount of up to $2,500 per day for each day
beyond the date that a bill or claim was to be processed in accordance
with section 3224-a of the insurance law. The limitation of such
penalty to an aggregate of $5,000 is also deleted by this amendment.

JUSTIFICATION:  The provisions regarding prompt payment were enacted
in 1997 to ensure, in part, that health care providers receive timely
payment for care rendered to their patients from health insurance
plans. Many health care providers and patients continue to raise
concerns regarding the length of time it takes to obtain
reimbursement.  Because of the unequal bargaining power between health
insurance plans and individual physicians and hospitals throughout New
York State, prompt payment provisions of contracts cannot be fairly
negotiated. The combination of rapidly rising office and institutional
overhead costs and continuing efforts by insurers to inappropriately
decelerate reimbursement for medically necessary care jeopardizes the
stability of the health care system and the ability of providers to
provide such care.


Moreover, advances in the processing of electronic claims allow health
insurance plans to process bills for services rendered much faster
than when the original prompt payment provisions were enacted.
Accordingly, expedited payments to hospitals, physicians and other
health care providers (from 45 to 15 days for electronic requests for
payment and from 45 to 30 days for written requests) are both
necessary and feasible.

In light of the substantial profits generated by the health insurance
industry since the original prompt payment provisions were enacted,
the financial penalties set forth in the statute have not sufficiently
deterred health insurance plans from continuing to routinely
inappropriately delay reimbursement to providers for health care
services rendered and to patients for claims. Thus, many health
insurance plans do not have an incentive to comply with prompt payment
obligations. The only way to change this is by substantially
increasing the penalties. Accordingly, this legislation significantly
increases the amount of the penalties that may be imposed by the
Superintendent of Insurance for the failure to pay health care claims
or bills for services rendered in a timely fashion and makes the
imposition of a civil penalty mandatory. The maximum civil penalty is
increased from $500 per day for each day beyond the date that a claim
or a bill was to be processed in accordance with the prompt payment
provisions to $2,500 per such day. In addition, the limitation on
civil penalties of $5,000 is removed. Such higher penalties can only
be imposed after notice and a hearing by the Superintendent of
Insurance, which safeguards the rights of t hose parties accused of
violating the statute's prompt payment Provisions.

PRIOR LEGISLATIVE HISTORY; 2009: A. 3591 Referred to Insurance;
2007-06: A10078/S. 7043 Referred to Insurance

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE:  This act will take effect on the ninetieth day after
it shall have become a law.