BILL NUMBER: S9020

SPONSOR: BRESLIN
 
TITLE OF BILL:

An act to amend the insurance law, in relation to penalties imposed on
subcontractors for failure to adhere to the standards for prompt, fair
and equitable settlement of claims for health care and payments for
health care services

 
PURPOSE OR GENERAL IDEA OF BILL:

To increase penalties on health insurance plans for failing to pay
health care claims within statutorily-defined time frames, and expand
the entities that could be subject to these penalties.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends subsection (c) of Section 3224-a of the Insurance Law
to grant the Financial Services Superintendent the authority to double
the penalties imposed on a health insurer when it is found that the
insurer has engaged in patterns of violating New York's Prompt Payment
              

law. It also would grant authority to the Superintendent to impose
prompt payment penalties on the subcontractors of a health insurance
plan that are responsible for paying claims.

Section 2 sets forth the effective date.

 
JUSTIFICATION:

The New York Department of Financial Services recently announced in its
2023 Annual Report 2023-annual-renort.pdf (ny.gov) that it had produced
over $117 million in Prompt Payment law recoveries. These recoveries,
based upon an investigation of over 26,000 health care provider
complaints in 2023, was a nearly 50% increase in such recoveries from
2022.

While at first glance this appears to be a positive development, it
actually highlights that the existing Prompt Payment law sanctions are
not presenting a sufficient deterrent to ensure health insurers pay
claims timely in the first place. Practice transactional costs are often
immense as a result of aberrant health insurer practices.  Physicians,
hospitals and other care providers often must spend hours or days on
unnecessary phone calls and e-mails to ensure they are reimbursed for
the patient care delivery these insurers are legally obligated to cover.
This can take months or even years, well past the 30-day time frame
within which claims are required to be paid.

In addition, we have heard from numerous health care providers who are
experiencing long delays in the payment of claims by health insurers as
a result of pretextual medical record requests using vague or unsup-
ported concerns. While health insurers have an important responsibility
to investigate claims to ensure they are properly billed, the frequency
by which these medical records requests occur, based upon the sheer
volume of complaints regarding delayed claims, suggest a potentially
more pernicious purpose for these requests.

New York's Prompt Payment law, enacted over 25 years ago, needs to be
updated to increase the penalties that can be imposed on health insurers
when there is evidence that the health insurer has engaged in a pattern
of inappropriately delaying the payment of claims past the statutory-de-
fined time periods for reviewing and paying claims.  This legislation
would also permit the imposition on penalties on subcontractors that the
health plan has designated to review and pay claims where the subcon-
tractor is also responsible for the inappropriate delay in claims
payment.

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law and apply to all health care claims submitted after such
date. Effective immediately, the addition, amendment and/or repeal of
any rule or regulation necessary for the implementation of this act on
its effective date are authorized to be made and completed on or before
such date.