S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4833
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                             February 13, 2025
                                ___________
 
 Introduced  by  Sen. SKOUFIS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Insurance
 
 AN ACT to amend the insurance law and the public health law, in relation
   to downcoding on initial  review  and  audits  reversing  or  altering
   medical necessity determinations

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraphs 4 and 5 of subsection (b) of section  3224-b  of
 the  insurance  law  are renumbered paragraphs 6 and 7 and two new para-
 graphs 4 and 5 are added to read as follows:
   (4) A REVIEW OR AUDIT OF CLAIMS BY OR ON BEHALF OF A HEALTH PLAN SHALL
 NOT REVERSE OR OTHERWISE ALTER A MEDICAL NECESSITY DETERMINATION,  WHICH
 INCLUDES  A  SITE  OF  SERVICE  OR LEVEL OF CARE DETERMINATION MADE BY A
 UTILIZATION REVIEW AGENT OR EXTERNAL APPEAL AGENT  PURSUANT  TO  ARTICLE
 FORTY-NINE  OF  THIS  CHAPTER OR ARTICLE FORTY-NINE OF THE PUBLIC HEALTH
 LAW.
   (5) A REVIEW OR AUDIT OF CLAIMS BY OR ON BEHALF OF A HEALTH PLAN SHALL
 NOT DOWNGRADE THE CODING OF A CLAIM IF IT HAS THE EFFECT OF REVERSING OR
 ALTERING A MEDICAL NECESSITY DETERMINATION, WHICH  INCLUDES  A  SITE  OF
 SERVICE  OR  LEVEL  OF  CARE  DETERMINATION  MADE BY OR ON BEHALF OF THE
 HEALTH PLAN; PROVIDED HOWEVER, THAT  NOTHING  IN  THIS  PARAGRAPH  SHALL
 LIMIT A HEALTH PLAN'S ABILITY TO REVIEW OR AUDIT CLAIMS FOR FRAUD, WASTE
 OR ABUSE.
   § 2. Subsection (i) of section 3224-a of the insurance law, as amended
 by  section  10 of part YY of chapter 56 of the laws of 2020, is amended
 to read as follows:
   (i) Except where the parties have developed  a  mutually  agreed  upon
 process for the reconciliation of coding disputes that includes a review
 of  submitted  medical  records  to  ascertain  the  correct  coding for
 payment, a general hospital certified pursuant to  article  twenty-eight
 of  the  public health law shall, upon receipt of payment of a claim for
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD07475-01-5
              

 S. 4833                             2
 
 which payment has been adjusted  based  on  a  particular  coding  to  a
 patient  including  the  assignment of diagnosis and procedure, have the
 opportunity to submit the affected claim with medical records supporting
 the hospital's initial coding of the claim within thirty days of receipt
 of  payment.  Upon  receipt  of  such  medical records, 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 shall review such information to ascertain the correct
 coding for payment based on national coding guidelines accepted  by  the
 centers for Medicare and Medicaid services or the American medical asso-
 ciation,  to  the  extent  there  are codes for such services, including
 ICD-10 guidelines to  the  extent  available,  and  process  the  claim,
 including  the  correct  coding,  in  accordance with the timeframes set
 forth in subsection (a) of this  section.  In  the  event  the  insurer,
 organization,  or  corporation  processes  the claim consistent with its
 initial determination, such decision shall be accompanied by a statement
 of the insurer, organization or corporation setting forth  the  specific
 reasons  why  the initial adjustment was appropriate. An insurer, organ-
 ization, or corporation that increases the payment based on the informa-
 tion submitted by the general hospital, shall pay to the general  hospi-
 tal  interest  on  the  amount  of  such increase at the rate set by the
 commissioner of taxation and finance for  corporate  taxes  pursuant  to
 paragraph  one  of  subsection (e) of section one thousand ninety-six of
 the tax law, to be computed from the  date  thirty  days  after  initial
 receipt  of  the  claim if transmitted electronically or forty-five days
 after initial receipt of the claim if transmitted by paper or facsimile.
 Provided, however, a failure to remit timely payment shall  not  consti-
 tute  a  violation  of  this section. [Neither the initial or subsequent
 processing of the claim by the  insurer,  organization,  or  corporation
 shall  be  deemed  an  adverse  determination as defined in section four
 thousand nine hundred of this chapter if based solely on a coding deter-
 mination.] Nothing in this subsection shall apply to those instances  in
 which  the  insurer  or  organization,  or  corporation has a reasonable
 suspicion of fraud or abuse or when an insurer, organization, or  corpo-
 ration  engages  in reasonable fraud, waste and abuse detection efforts;
 provided, however, to the extent any subsequent payment adjustments  are
 made  as  a  result of the fraud, waste and abuse detection processes or
 efforts, such payment adjustments shall  be  consistent  on  the  coding
 guidelines required by this subsection.
   §  3.  Subsection (a) of section 4900 of the insurance law, as amended
 by chapter 586 of the laws of 1998, is amended to read as follows:
   (a) "Adverse determination" means a  determination  by  a  utilization
 review  agent that an admission, extension of stay, or other health care
 service, upon review based on the information provided, is not medically
 necessary, OR A DECISION TO DOWNGRADE THE CODING OF A CLAIM TO A  LOWER-
 LEVEL SERVICE THAN THE ONE SUBMITTED BY THE PROVIDER FOR REIMBURSEMENT.
   §  4.  Subdivision  1  of  section  4900  of the public health law, as
 amended by chapter 586 of the laws  of  1998,  is  amended  to  read  as
 follows:
   1.  "Adverse  determination"  means  a  determination by a utilization
 review agent that an admission, extension of stay, or other health  care
 service, upon review based on the information provided, is not medically
 necessary,  OR A DECISION TO DOWNGRADE THE CODING OF A CLAIM TO A LOWER-
 LEVEL SERVICE THAN THE ONE SUBMITTED BY THE PROVIDER FOR REIMBURSEMENT.
   § 5. This act shall take effect immediately.