NEW YORK’S SURPRISE OUT-OF-NETWORK PROTECTION …

[Pages:30]NEW YORK'S SURPRISE OUT-OF-NETWORK PROTECTION LAW

Report on the Independent Dispute Resolution Process

September 2019

New York State Department of Financial Services Linda A. Lacewell

Superintendent of Financial Services

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EXECUTIVE SUMMARY

New York's Out-of-Network Law ("OON Law"), the first of its kind in the nation, takes a comprehensive approach to addressing bills for emergency services and surprise bills from outof-network (OON) doctors and other health care providers, and ensures that consumers are protected.1 In 2009, then Attorney General Cuomo fought for groundbreaking settlements with health plans over their improper calculation of the promised usual and customary rate (UCR) for OON benefits by using defective data that, among other things, was old, mixed in-network costs for an OON benefit, and was collected by a subsidiary of a health plan that had a conflict of interest. Building on that success, the Department of Financial Services (DFS) under Governor Cuomo issued a 2012 report entitled "An Unwelcome Surprise: How New Yorkers Are Getting Stuck with Unexpected Medical Bills from Out-of-Network Providers" after receiving numerous complaints from consumers who received unexpected and sometimes excessive medical bills from OON providers.

DFS worked with various stakeholders ? including consumers, providers, and health plans ? to pass and implement the groundbreaking OON Law in 2014. From its implementation in March of 2015 through the end of 2018, the OON Law has saved consumers over $400,000,000. The OON Law reduced OON billing in New York by 34% and lowered innetwork emergency physician payments by 9%.2

The OON Law contains extensive consumer protections, including requirements that health plans hold consumers harmless from emergency and surprise OON bills, improved

1 Part H of Chapter 60 of the Laws of 2014. 2 .

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disclosure, extended network adequacy requirements, minimum OON coverage to be made available to consumers, expanded external appeal rights, and easier claims submission.

The OON Law's fundamental reform is that the consumer is protected from OON emergency and surprise bills, and billing is between the provider and the health plan. To resolve any billing disputes between the provider and the health plan, the OON Law establishes an Independent Dispute Resolution (IDR) process for OON emergency physician services in a hospital, and surprise bills in hospitals and other outpatient settings. Providers, health plans, and consumers may submit a dispute to an IDR entity (IDRE) through a portal on the DFS website. The IDRE makes a determination as to whether the provider's fee or the health plan's payment is more reasonable, based upon the last best offer of each party. This Report focuses on the progress of the IDR process to date.

The IDR process was implemented on March 31, 2015, and 2,595 decisions were rendered between 2015-2018. The number of IDR requests and decisions has been steadily increasing each year as evidenced in the chart below.

Total IDR Decisions Rendered for Emergency Services & Surprise Bills 2015-2018

1400

1200

1148

1000

807 800

600

491

400

200

149

0 2015

2016

2017

2018

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Providers have been prevailing more often than health plans when the emergency services and surprise bill results are combined for 2015-2018. However, that is not the case when the results are considered based on decision type for 2015-2018. With respect to emergency services, 43% of decisions were in favor of the health plan, 24% were in favor of the provider, and 33% were split between the health plan and provider, which occurred when more than one current procedural terminology (CPT) code was submitted for the patient's services and the IDRE found in favor of the health plan for some codes and the provider for others. However, beginning in 2018, providers prevailed more often than health plans for disputes involving emergency services. With respect to surprise bill decisions for 2015-2018, 13% were in favor of the health plan, 48% were in favor of the provider, and 39% were split between the health plan and provider. One unexpected finding DFS encountered is that several services may be provided during one date of service, and a significant number of both emergency and surprise bill decisions have found in favor of the health plan's payment for some services and the provider's charge for other services in these situations as evidenced in the chart below.

IDR Decisions for Emergency Services & Surprise Bills 2015-2018

450 400 350 300 250 200 150 100

50 0 2015

2016

2017

2018

Decision rendered in favor of Health Plan

Decision rendered in favor of Provider

Split decision

Settlement reached

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DFS also monitors the dollar amounts determined to be the most reasonable in the IDR decisions. The dollar amounts of IDR decisions are most frequently in the $1,000 to $5,000 range, regardless of whether the health plan or the provider prevails.

Total IDR Decision Amounts when Health Plan Payment was Determined More Reasonable for

Emergency Services & Surprise Bills

120

100

80

60

40

20

0 $200 or less

2015

3

2016

8

2017

7

2018

13

$200-500

9 25 26 21

$500-1,000

20 58 59 37

$1,0005,000

19 63 97 77

$500015,000

3 23 33 39

$15,00030,000

1 6 11 13

$30,000 or greater 0 2 7 8

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Total IDR Decision Amounts when

Provider Charge was Determined More Reasonable for

Emergency Services & Surprise Bills

200

180

160

140

120

100

80

60

40

20

0 $200 or less

$200-500

$500-1,000 $1,000-5,000

$500015,000

$15,00030,000

2015

1

0

11

18

6

0

2016

1

1

6

40

15

8

2017

3

7

42

84

39

25

2018

1

4

88

188

89

15

$30,000 or greater 1 4 9 19

DFS sampled IDR decisions to determine how the prevailing party's payment or charge compares to UCR. Overall, when the health plan's payment was determined to be more reasonable, that payment was most frequently 20% to 100% lower than UCR. For IDR decisions where the provider's charge was determined to be more reasonable, the provider's charge was most frequently 0% to 50% higher than UCR.

This Report provides a summary of New York's groundbreaking OON Law, the IDR process, and the IDR results.

BACKGROUND Before 2009, health plans typically used a database supplied by Ingenix, a subsidiary of UnitedHealth Group, to determine reimbursement rates for OON care based on UCR. On January

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13, 2009, the New York State Office of the Attorney General released a report entitled, "Health Care Report: The Consumer Reimbursement System is Code Blue," which detailed the flaws in the Ingenix database.3 The report found that the Ingenix database systematically understated the market rates for health care services. The data used in the database was outdated and it mixed in-network bills with OON bills. The report further found that the Ingenix database was tainted by a conflict of interest because it was compiled by a self-interested health plan. The Attorney General entered into settlement agreements with health plans and established a not-for-profit company to create a UCR database. The not-for-profit company, FAIR Health, Inc., was established in October 2009 to provide transparency and an independent source of data for OON reimbursements based on UCR.

Today, health plans typically base OON reimbursements on one of three sources: the FAIR Health database, the Medicare fee schedule, or a set fee established by the health plan. However, there are instances when the reimbursement amount is less than what the provider charges.

DFS received complaints from consumers who did everything reasonably possible to use in-network hospitals and doctors, but nonetheless received a bill from a specialist or other provider who the consumer did not know was OON. Related complaints of undisclosed and excessive charges were particularly pronounced in the emergency care setting. Surprise, involuntary medical bills from OON providers contributed to the growing problem of consumer medical debt, which has been a significant cause of personal bankruptcy. Simply put, surprise medical bills are causing some consumers to go broke.

Under the OON Law, consumers are taken out of disputes over OON emergency and surprise bills, and health plans and providers can use the IDR process to resolve such billing disputes. The OON Law includes extensive consumer protections including hold harmless

3See: .

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requirements, protection from surprise bills, improved disclosure, extended network adequacy requirements, minimum OON coverage to be made available to consumers, expanded external appeal rights, and easier claims submission. The OON Law also established an OON Workgroup appointed by the Governor with recommendations by the Legislature. The OON Workgroup Report, issued at the beginning of 2017, found the OON Law to be highly effective in expanding the availability of OON coverage in the small group market and in establishing consumer protections relating to hold harmless, independent dispute resolution, disclosure, network adequacy, and improved claims submission.

In fact, the OON Law has saved consumers over $400,000,000 from the time it was implemented in March of 2015 through the end of 2018 with respect to emergency services alone. This savings has been realized in part through a reduction in costs associated with emergency services and an increased incentive for network participation. Consumers in need of emergency services are typically unable to choose the physician that provides the services. In addition, even when the consumer receives emergency services at an in-network hospital, the physician may not necessarily be in-network. Prior to the OON Law, there were no protections from excessive emergency charges; consumers or health plans would just pay the amount billed, and physicians providing emergency services did not have an incentive to participate in health plan networks. By establishing an independent dispute resolution process for OON emergency services, the OON Law reduced OON billing by 34% and lowered in-network emergency physician payments by 9%.4

New York was the first state to address the surprise bill issue with a comprehensive legislative approach. Other states are now using the New York OON Law as a model, and

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