New York Expands Protections Under Surprise Bill Law

February 11, 2020


Effective January 1, 2020, New York has expanded the scope of the consumer protections set forth in New York’s Emergency Medical Services and Surprise Bills (Surprise Bill Law) to include bills for out-of-network (OON) hospital emergency services including inpatient admissions through the emergency room. The law also requires health plans regulated by New York State and hospitals to submit to non-binding mediation at least sixty (60) days prior to termination of a participating provider agreement. The new law impacts only those health plans that are regulated by New York State, including Medicaid managed care and fully insured commercial plans

A.   NYS Takes an Activist Approach with respect to Out of Network Hospitals

Under the expanded Surprise Bill Law, a health plan must pay an OON hospital an amount it deems reasonable for the emergency services rendered and ensure that the insured does not incur greater out-of-pocket costs for emergency services than he or she would have incurred with an in-network physician or hospital. If the health care plan and the OON hospital had previously entered into a participating provider agreement, the health care plan’s payment to the OON hospital must be at least 25% greater than the amount the health care plan would have paid for the claim had the hospital been in-network, based on the most recent contract between the health care plan and the hospital. If the contract between the health care plan and hospital expired more than 12 months prior to payment of the disputed claim, the payment amount must be adjusted based on the medical consumer price index.

The provisions of the new law do not apply to “safety net” hospitals that have at least 60% of inpatient discharges annually consisting of Medicaid, uninsured, and dual eligible individuals. For these hospitals, and any hospital that did not have a prior participating provider agreement with the respective health care plan, the criteria of the Independent Dispute Resolution process applicable to physicians applies.

The impact of this legislation will affect not only reimbursement for OON hospital emergency services, but also obligations prior to termination of participating provider agreements and the lasting effect of negotiated rates after the termination these contracts. Moreover, it is unclear at this stage how the new law impacts the reimbursement of services for health care plans that have contracted with third-party wrap-around networks (e.g., Multi-Plan) specifically for OON services.

B.   NYS Requires Health Care Plans and Hospitals to Participate in Mediation Prior to Contract

In addition to expanding consumer protections for OON emergency hospital services as outlined above, the law also sets forth a requirement that, at least sixty (60) days prior to the termination of a participating hospital agreement, the health care plan and hospital utilize a mutually agreed upon mediator to resolve outstanding contractual issues. The results of the mediation are not binding, however. We are expecting further guidance from the NYS Department of Financial Services (DFS) on this new requirement; however, a hospital should be aware of the need for mediation if it intends on terminating its agreement with a health care plan. Without further clarification from DFS, it appears to be a prerequisite to termination and could affect the termination date if not complied with.

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If you have any questions regarding this Alert, please contact the Garfunkel Wild attorney with whom you regularly work.

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