Senate Bill S257

                                BILL NUMBER:S257

TITLE OF BILL:
An act
to amend the insurance law, in relation to imposing certain limits,
requirements and prohibitions regarding the seeking of refunds by
certain insurers, organizations or corporations from health care
providers

PURPOSE:
To protect physicians and other health care providers from HMOs
and insurers seeking refunds from them many months or years after
payment is made to such provider for care rendered.

SUMMARY OF PROVISIONS:
Amends section 3224-a of the insurance law by
adding a new subsection (b-l). This new section would require that
insurers have no more than 180 days to file for a refund in the case
of a fraudulent claim, with written notice explaining the reason for
the refund. Furthermore, this new section requires insurers seeking
refunds to provide the health care provider with written notice that
explains in detail the reasons for the refund and provides the
provider with opportunity to challenge the refund results. Written
notice shall be made in not less than thirty days prior to the
seeking of a refund or the making of adjustments.

              

JUSTIFICATION:
Currently, New York State's Prompt Payment Law requires
HMOs and other insurers to pay undisputed physician and other
provider claims within 45 days after they are received by such HMO or
insurer. However, one manner by which HMOs and insurers have
frequently attempted to skirt this requirement has been to make payment
on the claim to the provider within the 45 day time limit, but then
seek a refund of such payment, claiming it was an overpayment or an
improper payment. These attempted refunds are sought months and, at
times, years after payment is made to the physician or other
provider. These refund requests can be for thousands of dollars, and
can present an enormous financial hardship for individual physicians,
particularly small and sole physician practices. Currently, there is
virtually no limitation in law to these refund requests, except for
the six-year statute of limitations applicable to all contracts in New
York State. Certainly, should an insurer suspect that the claim was
submitted fraudulently, such insurer should have an opportunity to
seek redress and a refund. However, these refund requests go well
beyond reviewing previously paid claims for detecting fraud, and are
being used to essentially permit health
plans to avoid compliance with the Prompt Payment Law. This
legislation would address this problem and strike an appropriate
balance between permitting insurers to ensure proper review of
claims, while at the same time giving physicians and other providers
the security of knowing that they will not have to be coerced to pay
potentially tens of thousands of dollars in inappropriate refund
requests so that the insurer can evade the prompt payment law.

LEGISLATIVE HISTORY:
S.1399 of 2009/2010; Referred to Senate Insurance Committee.


S.109/A.6058 of 2007/2007; Referred to Senate Insurance Committee.
S.1987/A.3106 of 2005/2006; Referred to Senate Insurance Committee.
S.3015A/A/8941A of 2003/2004; Referred to Senate Insurance Committee.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately and shall not apply to any agreement
executed on or before such date.