Morelle Managed Care Reform Bill Passes Assembly

June 21, 2012
Assemblyman Joseph D. Morelle, D-Irondequoit, today announced Assembly passage of a bill preventing insurers from denying payment to hospitals for inpatient care solely because reimbursement claims aren’t timely or insurers aren’t notified about the claim. (A. 9946 memo attached.)

“When legitimate services are rendered by a hospital, payment for those services should be made regardless of the timetable involved,” said Morelle, who chairs the Assembly’s Committee on Insurance. “The failure to reimburse undermines the system patients depend on, and high-quality care must always take priority over bureaucratic requirements.”

The bill does allow for reduction of no more than $2,000 or 12 percent of the payment due, whichever is less, in instances where the time lag is excessive.

Morelle’s proposal also prevents carriers from unilaterally downgrading a reimbursement by permitting a hospital to request a review of patient records to verify the scope and degree of the care provided.

This is the latest of several managed care reforms sponsored by Morelle, including a 2009 law making new treatments more accessible to patients and streamlining the HMO billing process.

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A09946 Memo:

TITLE OF BILL: An act to amend the insurance law and the public health law, in relation to denial of claims

Purpose or General Idea of this Bill:

This bill amends the insurance law and the public health law in order to address certain health plan practices and the changing marketplace.

Summary of Provisions:

Section 1 amends section 3217-b of the insurance law by adding a new subsection (j); section 2 amends section 4325 of the insurance law by adding a new subdivision (k); and section 3 of the bill amends section 4406-c of the public health law by adding a new subdivision 8. These amendments prevent insurers and health plans from denying payment to a

general hospital for a claim for medically necessary inpatient services resulting from an emergency admission solely on the basis that the hospital did not timely notify the insurer or plan that the services had been provided.

Section 4 amends section 3224-a of the insurance law by adding a new subsection (i) to prevent unilateral coding adjustments.

Justification:

This bill is intended to address certain health plan practices that result in unilateral reductions of payments and claims denials. This bill strikes a balance, as it preserves all health plan rights to review medical necessity, utilization of services, and claims payment processing but in a manner that provides fairness to providers as well as a remedy.

Sections 1 through 3 of the bill address technical denials to prevent insurers and health plans from denying payment to a hospital for a claim for medically necessary inpatient services resulting from an emergency admission solely on the basis that the hospital did not timely notify the insurer or plan that the services had been provided.

Under this proposal, plans would be barred from denying medically necessary claims for inpatient services resulting from an emergency admission solely from a failure to notify. However, hospitals and plans could agree to reductions in payment for such claims for failure to timely notify as long as the reduction did not exceed the lesser of $2,000 or 12% of the payment amount otherwise due.

Section 4 of the bill prevents insurers and plans from down coding claims without reviewing a medical record. This would ensure that coding adjustment is not applied to a claim to a lower reimbursement level without the benefit of reviewing a medical record to assess the severity of services that were provided to a patient. Under this proposal, if a plan unilaterally down codes a claim, a provider would have the right to resubmit the claim within 30 days with the related medical record, which must be reviewed by the plan. The plan would be required to reprocess the claim based on the coding that is supported by the medical record and, if that results in an increase in payment, pay an interest penalty on the amount of any increase if the insurer or plan failed to meet the prompt pay timeframes when reprocessing the claim.

Prior Legislative History: New Bill.

Fiscal Implications for State and Local Government: None.

Effective Date: This act shall take effect on July first, two thousand thirteen.