Albany, NY – Despite united opposition by all members of the State Assembly representing Westchester County, the Assembly has passed a bill that would benefit insurance companies at the expense of hospitals and could prove financially devastating to suburban safety-net hospitals throughout the state, including throughout the Hudson Valley and on Long Island. The legislators urged the State Senate to join them in protecting their local public and safety-net hospitals by opposing the current version of the legislation

On Wednesday, the united delegation members forced a floor debate for nearly four hours on the Assembly version of the bill (A. 264B / S. 3171A,) which had been pushed through two committees and rushed to the floor for debate in a matter of a few hours. During the debate, each of the Westchester Assembly members took to the floor to detail their concerns with the bill and highlight its effect on hospitals throughout the state, especially the Westchester Medical Center, the major safety-net hospital and Level 1 Trauma Center for the region. Far from being a purely regional concern, the delegation noted that in Nassau and Suffolk County as many as 10 safety-net hospitals would be similarly impacted, including public hospitals like Stony Brook University Medical Center. At the debate’s conclusion, the measure passed the Assembly and went to the Senate.

The controversial measure would allow health insurers to reject hospital bills for post-emergency admission inpatient hospital care for an out-of-network patient. It would force the hospital to submit to an Independent Dispute Resolution (IDR) process whenever the hospital and the insurer could not agree on appropriate fees. Although members of the delegation strongly support IDR processes for unreasonable out-of-network physician fees to prevent surprise medical bills for patients, they expressed skepticism that extending the same process to hospital post-emergency services without taking into account the different economic circumstances of emergency room care would truly benefit patients. In their analysis, applying the existing doctor-IDR process without changes would instead tilt the playing field heavily towards insurers in the negotiations on healthcare agreements between hospitals and insurers costs.

“Everyone wants to help middle class and financially-struggling patients deal with the impact of unexpected and expensive medical care, but this bill doesn’t do that,” said Assemblymember Amy Paulin (D-Scarsdale.) “Instead, it cripples some of the essential safety-net providers that our poorest and most vulnerable patients rely on. The state already has an established definition for safety-net hospitals which it has used time and again to target state aid programs like DSRIP. But this bill would establish a completely new definition of hospitals to be exempted from binding arbitration with insurers, and many hospitals like Westchester Medical Center have been left off. That should raise real questions about whether this bill is truly policy that will help patients or will instead help one side in a contractual dispute.”

“The bill is a misguided attempt to lower costs by putting insurance companies in charge of healthcare,” said Assemblyman Tom Abinanti (D-Greenburgh/Mt. Pleasant). “This bill would increase insurance company profits by allowing them to refuse to pay the higher costs for necessary trauma care. This bill does nothing for patients but gives insurance companies rights that patients don’t have. This bill permits price-fixing – not by the government, but by insurance companies who are not known a consumer-friendly. It will have a disparate impact on the Westchester Medical Center – a public hospital that provides the highest level tertiary care for everyone, no matter their finances.”

“This bill does not protect consumers,” said Assemblyman David Buchwald (D-White Plains/Mt. Kisco). “Instead, by interfering in negotiations between hospitals and insurance companies, it threatens Westchester Medical Center’s financial stability. It’s one thing for the legislature to set policy, but my constituents did not send me to Albany to pass bills that pick winners and losers in the middle of a private negotiation, which is what this bill does. My Assembly colleagues should look carefully at what this legislation means for hospitals in their own districts, but I had to vote against it to protect a cornerstone of our region’s health care system, Westchester Medical Center.”

“The Westchester Medical Center is a regional tertiary care hospital that is such a valuable resource to residents throughout the Hudson Valley,” said Assemblywoman Sandy Galef (D-Ossining). “By protesting this bill through our delegation’s filibuster, we prioritized the important work of the hospital over the fiscal desires of Empire Insurance Company.”

“Healthcare is a prevalent issue for New Yorkers statewide, and emergency services prices should not deter people from receiving lifesaving care,” said Assemblymember J. Gary Pretlow (D-Mount Vernon). “This bill comes up with its own definition of a safety-net hospital and this will negatively affect Westchester Medical Center’s viability as the county’s public safety-net hospital and might also have negative implications for Mt. Vernon Hospital. This bill’s purpose is to take power away from hospitals and aims to benefit insurance companies. This bill is a detriment to our constituents and does not help middle class families that struggle to pay unexpected costly but necessary care.”

“Simply put, this legislation will hurt patients and providers across our region” said Assemblyman Nader Sayegh (D-Yonkers). “In a haphazard attempt to stabilize spiraling healthcare costs, this bill will directly impact the quality of care that Westchester Medical Center, a major trauma center renowned for its expertise and trusted for generations, has always provided. I was proud to stand alongside other members of the Westchester Delegation in showing our support for our community’s healthcare providers over insurance companies, and can be counted on to do so in the future.”

In the course of the debate, the members sounded the alarm that a recent amendment departs dramatically from the methodology used to recognize and support safety-net hospitals. The bill does provide an exemption for these hospitals from the IDR process, out of a recognition that those hospitals serving large numbers of poor patients need the full rates that they usually charge out-of-network patients’ insurance companies to compensate for losses incurred in treating poorer patients. Public hospitals in particular are required to take all patients who seek their treatment.

However, the definition of a safety-net hospital provided in the bill is dramatically different than what the state has previously used. As established by the Medicaid Redesign Team’s DSRIP program, the state recognizes any public hospital, critical access hospital, or sole community hospital as automatically being a safety-net provider. The MRT also established a standard whereby a hospital where uninsured, Medicaid, or dual eligible patients made up at least 35% of the outpatient services and 30% of their inpatient discharges would also be considered a safety-net. This bill instead disregards the question of public or private, and ignores the patient population for outpatient services. It only makes exemptions for safety-nets entirely contingent on 60% of inpatient discharges being uninsured, Medicaid, or dual eligible patients – doubling the required percentage and leaving many public and community hospitals unprotected.

Even without the change in treatment for safety-net hospitals, portions of the bill remain problematic because it changes the incentives for insurers and hospitals to reach a settlement in contract negotiations over in-network reimbursements.

Under current law, hospitals and insurers each have an incentive to reach an agreement for emergency, inpatient, and outpatient prices. Hospitals see an increased number of insured patients for all services, including non-emergency elective services, and the more reasonable reimbursements from private insurance help defray some of the costs of treating uninsured patients and those on Medicaid, where reimbursements are much lower. For hospitals like Westchester Medical Center, which must maintain a critical but costly state-of-the-art Level 1 Trauma Center capable of handling the most dire and challenging emergencies, regardless of the patient’s ability to pay, a steady flow of insured patients seeking care is critical to the hospital’s survival.

Insurers also have an incentive under current law to reach a negotiated agreement on reimbursements to avoid paying “usual and customary” out-of-network fees from the hospital that may be higher than what could be negotiated. Additionally, since patients are protected by law from paying more in co-pays or deductibles for emergency care at an out-of-network hospital than they would pay for an in-network hospital, the insurers must make up the difference if they can’t negotiate sufficient in-network rates.

Yet under an IDR process as outlined in the bill, an insurer faces less of a burden if they play contractual hardball and remain out-of-network. They could ignore the hospital’s charges and only offer to pay what they deem “reasonable” reimbursement for the care provided, or send the dispute to a third-party arbitrator. This directly undercuts the negotiating power of hospitals both during negotiations to go in-network with an insurer, and in individual cases when a dispute arises about sufficient reimbursement for emergency health care services.

Local healthcare leaders added their voice to the legislators’ efforts.

“Why should New York State laws protect the multi-billion dollar profits of the insurance companies?” asked Michael D. Israel, President and CEO of WMCHealth. “Protecting hospitals, especially safety net hospitals, also protects access to care for all New Yorkers. Allowing insurance companies to avoid negotiating fair rates with hospitals, will narrow healthcare networks and reduce access to care. This only serves to benefit the bottom lines of insurance companies, while our communities and local hospitals and healthcare providers will bear the burden.”

“When patients are in need of medical care, the last thing they should have to worry about is whether or not a facility accepts their insurance,” said Greg Speller, Executive Vice President of 1199SEIU’s Hudson Valley/Capital Region. “This legislation makes it much easier for insurance companies to keep hospitals out of network, limiting choice for consumers. This comes down to a question of what is more important to New York State – quality patient care or insurance company profits. We are calling on the State to do the right thing by protecting access to patient care.”

“This bill pits multi-billion dollar for-profit national insurance companies against your community hospital,” said Kenneth E. Raske, President of the Greater New York Hospital Association. “We are grateful that the Westchester delegation has taken the side of patients and communities and opposed this harmful legislation. This is not just an issue for Westchester but for all New Yorkers.”

“I would like to thank the NYS Assembly members for standing up for non-profit hospitals and their patients against big, for-profit insurance companies,” said Michael Oates, President & CEO of the Hudson Valley Economic Development Corporation. “It is critical that legislation is not driven by the large national for-profit insurers who only value profit and shareholder value. Our not-for-profit hospitals in New York State clearly have a very different mission, namely taking care of people and saving lives. I would challenge anyone who thinks that the for-profit managed care companies, of which less than 10 control the entire U.S. market, care more about the health and well-being of their members than they do about shareholder results.”

“This bill is nothing less than a gift to insurance companies, who already have the upper hand with both providers and consumers,” said William M. Mooney, Jr., President & CEO of the Westchester County Association. “Unlike hospitals, which contribute enormously back to the community, health insurance companies provide very little economic or social benefit. In fact, it’s quite the contrary. The Westchester County Association strongly opposes this bill and urges the Senate to reject S.3171.”

“I am grateful to Assemblymember Paulin and the entire Westchester delegation for opposing this legislation,” said Michael J. Fosina FACHE, President of NYP/Lawrence Hospital. “This bill does nothing to protect vulnerable patients - to the contrary, it will allow insurance companies to hold New York’s hospitals hostage in contract negotiations. Our priority is providing high quality care to our patients, not fighting with insurance companies.”

“Independent Dispute Resolution is not a consumer protection,” said Kevin Dahill, President and CEO of the Suburban Hospital Alliance of NYS LLC. “It is a hospital killer that gives the insurers an unfair advantage. Patients already have protection from surprise bills in New York.”