NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5106
SPONSOR: Hunter TITLE OF BILL:
An act to amend the insurance law and the public health law, in relation
to prohibiting certain requirements in insurance contracts
PURPOSE:
The legislation would ban anti-competitive hospital contracting prac-
tices that create higher health care prices for consumers and employers.
SUMMARY OF PROVISIONS:
Section one amends the insurance law to prohibit health plans from
entering into agreements or contracts with health care providers that
require the health plan to include all members of a provider group in
its network, require the health plan to place all members of a provider
group in the same network tier, require the health plan to include all
members of a provider group in all of its products, forbid health plans
from using benefit design to encourage consumers to seek services from
higher-value health care providers; contain most-favored-nation
provisions in which the provider will not give, an equal or more favora-
ble price to any other plan; or limit the ability of the health plans or
provider from disclosing fees for services or the allowed amounts. Such
provisions in existing contracts would become null and void effective
January 1, 2021.
Section two amends the public health law to prohibit health plans from
entering into agreements or contracts with health care providers that
require the health plan to include all members of a provider group in
its network, require the health plan to place all members of a provider
group in the same network tier, require the health plan to include all
members of a provider group in all of its products, forbid health plans
from using benefit design to encourage consumers to seek services from
higher-value health care providers, contain most-favored-nation
provisions in which the provider will not give an equal or more favora-
ble price to any other plan, or limit the ability of the health plans or
provider from disclosing fees for services or the allowed amounts. Such
provisions in existing contracts would become null and void effective
January 1, 2021.
Section three provides the effective date.
JUSTIFICATION:
According to multiple studies, the cost of health care in New York
continues to exceed the national average, with increases in prices
charged by provides as one of the major driver of rising health insur-
ance premiums. According to the NY State Health Foundation's December
2016 report, Why are Hospital Prices Different? An Examination of New
York Hospital Reimbursement, "a hospital's market leverage - its bargain
power when negotiation with insurers - is a key factor in the prices a
hospital can command," and "contract provisions between hospitals and
insurers can hinder competition, product innovation, transparency, and
cost containment strategies." To maintain access to health care for New
Yorkers and support a competitive market for the industry, the report
recommended barring certain contractual language from hospital/insurer
contracts, and that policies could include the barring of confidentiali-
ty language, anti-steering language, and language that hinders the abil-
ity of the tiered network product to work efficiently.
This legislation builds upon the Foundation's recommendations and seeks
to improve affordability for employers and consumers by prohibiting
restrictive contracting language that create artificial barriers to
promoting greater competition in the marketplace, increasing transparen-
cy of healthcare costs, and providing more affordable options for
employers and consumers.
As an example, "all-or-nothing" contracts require that if a health plan
wants a contract with any provider or affiliate in a particular provider
organization, it must contract with all providers in the system. Provid-
er organizations use this type of provision to leverage the status of
their must-have providers to demand high payment rates for the entire
provider organization, including those providers in more competitive
areas and specialties. Similarly, restrictive contract provisions some-
times require that a health plan place all physicians, hospitals, and
other facilities associated with the dominant provider system in the
most favorable tier of providers. This legislation provides an equita-
ble balance for hospitals contracting with health plans and employer
groups, by allowing for competition, fair negotiations, and ensure
consumers benefits. The legislation would help address the issue of
pricing fairness and access to affordable health care in the state as
well as help ensure that New Yorkers are not subjected to unfair busi-
ness practices that increase health insurance premiums.
LEGISLATIVE HISTORY:
2023-24: A3148
2022: A3659
2020: A.9781
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
This act shall take effect January 1, 2026.
STATE OF NEW YORK
________________________________________________________________________
5106
2025-2026 Regular Sessions
IN ASSEMBLY
February 12, 2025
___________
Introduced by M. of A. HUNTER -- read once and referred to the Committee
on Insurance
AN ACT to amend the insurance law and the public health law, in relation
to prohibiting certain requirements in insurance contracts
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 3217-b of the insurance law is amended by adding a
2 new subsection (p) to read as follows:
3 (p)(1) No insurer that offers a managed care product or a comprehen-
4 sive policy that utilizes a network of providers shall enter into a
5 contract, written policy, written procedure or agreement with any health
6 care provider that:
7 (A) Requires an insurer to include all members of a provider group,
8 including medical practice groups and facilities, in its network of
9 participating providers;
10 (B) Requires an insurer to place all members of a provider group,
11 including medical practice groups and facilities, in the same network
12 tier;
13 (C) Requires an insurer to include all members of a provider group,
14 including medical practice groups and facilities, in all products
15 offered by the insurer;
16 (D) Prohibits insurers from using benefit designs to encourage members
17 to seek services from higher-value health care providers;
18 (E) Contains a most-favored-nation provision; provided, however, noth-
19 ing in this section shall be construed to prohibit a health insurer and
20 a provider from negotiating payment rates and performance-based contract
21 terms that would result in the insurer receiving a rate that is as
22 favorable, or more favorable, than the rates negotiated between a health
23 care provider and another entity; and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD08595-01-5
A. 5106 2
1 (F) Limits the ability of the insurer or health care provider from
2 disclosing fees for services or the allowed amounts to an insured or
3 insured's health care provider.
4 (2) After January first, two thousand twenty-six, any contract, writ-
5 ten policy, written procedure or agreement that contains a clause
6 contrary to the provisions set forth in this section shall be null and
7 void; provided, however, the remaining clauses of the contract shall
8 remain in effect for the duration of the contract term.
9 § 2. Section 4406 of the public health law is amended by adding a new
10 subdivision 6 to read as follows:
11 6. (a) No health maintenance organization that offers a managed care
12 product or a comprehensive policy that utilizes a network of providers
13 shall enter into a contract, written policy, written procedure or agree-
14 ment with any health care provider that:
15 (i) Requires an insurer to include all members of a provider group,
16 including medical practice groups and facilities, in its network of
17 participating providers;
18 (ii) Requires an insurer to place all members of a provider group,
19 including medical practice groups and facilities, in the same network
20 tier;
21 (iii) Requires an insurer to include all members of a provider group,
22 including medical practice groups and facilities, in all products
23 offered by the insurer;
24 (iv) Prohibits insurers from using benefit designs to encourage
25 members to seek services from higher-value health care providers;
26 (v) Contains a most-favored-nation provision; provided, however, noth-
27 ing in this section shall be construed to prohibit a health insurer and
28 a provider from negotiating payment rates and performance-based contract
29 terms that would result in the insurer receiving a rate that is as
30 favorable, or more favorable, than the rates negotiated between a health
31 care provider and another entity; and
32 (vi) Limits the ability of the insurer or health care provider from
33 disclosing fees for services or the allowed amounts to an insured or
34 insured's health care provider.
35 (b) After January first, two thousand twenty-six, any contract, writ-
36 ten policy, written procedure or agreement that contains a clause
37 contrary to the provisions set forth in this section shall be null and
38 void; provided, however, the remaining clauses of the contract shall
39 remain in effect for the duration of the contract term.
40 § 3. This act shall take effect January 1, 2026.
