Independent Dispute Resolution for Emergency Physician and Hospital Services Including Inpatient Services Following an Emergency Room Visit Q&A Guidance

The Financial Services Law includes an independent dispute resolution (IDR) process for surprise bills and bills for out-of-network (OON) emergency physician services. The Financial Services Law was recently amended to provide that bills for OON emergency hospital services, including inpatient services following an emergency room visit, will also be subject to the independent dispute resolution process beginning in 2020. (See Chapters 375 and 377 of the Laws of 2019.) The following are responses to questions that the Department of Financial Services (DFS) received about the changes to the IDR law.

Applicability

Q-1. When do the new laws take effect?
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The laws took effect on January 1, 2020 and apply to services provided on and after January 1, 2020.

Q-2. To which services do the new laws apply?
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Financial Services Law § 605(a) provides that a bill for emergency services from a non-participating physician or hospital, including a bill for inpatient services which follow an emergency room visit, is eligible for IDR.

Q-3. What services are considered to be inpatient services?
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Services provided by a non-participating hospital or services provided by a non-participating physician during an inpatient hospital stay following an emergency room visit are considered inpatient services.

Q-4. Are inpatient services following an emergency room visit eligible for IDR through the date of the patient’s discharge or only until the patient is stabilized?
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Inpatient services following an emergency room visit are eligible for IDR through the date the patient is discharged.

Q-5. How are the requirements in the new laws different from the original IDR requirements for emergency physician services?
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Emergency services provided by a non-participating physician in a hospital have been eligible for IDR since 2015 and include all services provided by the physician in a hospital until the patient is stabilized. The new laws now permit services provided by a non-participating physician in a non-participating hospital after the patient is stabilized to be subject to IDR as well.

Q-6. When would the provisions in the new laws for inpatient physician services following an emergency room visit in a hospital apply, and when would the surprise bill provisions apply?
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Services provided in a hospital are considered to be emergency services, and subject to the requirements and protections for emergency services, until the patient is stable. Once the patient is stable, the surprise bill protections apply when services are rendered by a non-participating physician in a participating hospital when a participating physician is unavailable, or a non-participating physician renders services without the insured’s knowledge, or unforeseen medical services arise at the time the health care services are rendered. The new laws’ provisions regarding inpatient physician services following an emergency room visit, typically would apply to inpatient non-participating physician services that follow an emergency room visit in a non-participating hospital once the patient is stable.

Q-7. Which hospitals are exempt from the laws?
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Under Financial Services Law § 605(d), the IDR process for emergency services does not apply to hospitals that had at least 60% of inpatient discharges annually which consisted of Medicaid, uninsured, and dual eligible individuals. For purposes of determining which hospitals this includes, DFS will use the Department of Health list of such hospitals that is in effect on the date services were provided.

Q-8. Do the new laws apply to health care services provided in New York and in other states?
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The new laws apply to health care services provided in New York.

 

Health Care Plan Payment Requirements

Q-9. What amount is a health care plan required to pay a hospital under the laws if the health care plan and hospital had not previously entered into a participating provider agreement?
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If the health care plan and hospital had not previously entered into a participating provider agreement, Financial Services Law § 605(a) provides that the health care plan must pay an amount that it determines is reasonable for the services rendered except for the insured’s in-network copayment, coinsurance, or deductible, if any.

Q-10. What amount is a health care plan required to initially pay a hospital under the laws if the health care plan and hospital had previously entered into a participating provider agreement?
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Under Financial Services Law § 605(e), when a health care plan and a hospital had previously entered into a participating provider agreement, the health care plan must pay an initial amount that is at least 25% greater than the amount the health care plan would have paid for the claim if the hospital had been in-network, based on the most recent contract between the health care plan and the hospital. If a health care plan believes this initial payment amount is not reasonable, it may file a dispute by proposing an amount it believes is reasonable. This is applicable to claims for services provided on or after January 1, 2020, even if the contract expired prior to January 1, 2020.

Q-11. What if the previous contract between the health care plan and the hospital expired several years prior to the payment of the disputed claim?
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If the previous contract between the health care plan and the hospital expired more than 12 months prior to the payment of the disputed claim, the payment amount must be at least 25% greater than the prior contracted rate and must be adjusted based on the medical consumer price index. This is the case even if the previous contract expired several years prior to the payment of the disputed claim. The base payment should increase each year by the amount of the previous year’s medical consumer price index, meaning that it is compounded annually.

Q-12. What if there is a dispute over the calculation of the health care plan payment amount required under Financial Services Law § 605(e) when the health care plan and hospital had previously entered into a participating provider agreement?
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A dispute over the calculation of the health care plan payment amount under Financial Services Law § 605(e) when the health care plan and hospital had previously entered into a participating provider agreement should be submitted to DFS’s Consumer Assistance Unit and should not be submitted to IDR.

Q-13. If a hospital is not a participating provider under the insured’s health insurance policy, but is a participating provider under other insurance policies offered by the health care plan, would emergency hospital services provided to the insured be eligible for the IDR process?
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Yes. Hospital services provided to the insured would be eligible for IDR because the hospital is not a participating provider with respect to the insured’s health insurance policy.

Q-14. What amount should the health care plan pay for the claim when the hospital is not a participating provider under the insured’s health insurance policy, but is a participating provider under other insurance policies offered by the health care plan?
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The health care plan should pay an amount that it determines is reasonable for the services rendered, under Financial Services Law § 605(a), except for the insured’s in-network copayment, coinsurance, or deductible, if any. The health care plan would not have to pay the rate that is 25% greater than the contracted rate.

 

Criteria for Determining a Reasonable Fee

Q-15. Which criteria should an IDR entity consider when determining a reasonable fee for an IDR involving a hospital?
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Under Financial Services Law § 604, an IDR entity shall consider all relevant factors, including:

  • Whether there is a gross disparity between the fee charged by the hospital and (1) fees paid to the hospital for the same services provided to other patients in health care plans in which the hospital is non-participating, and (2) the fees paid by the health care plan to reimburse similarly qualified out-of-network hospitals for the same services in the same region;
  • The teaching status, scope of services, and case mix of the hospital;
  • The hospital’s usual charge for comparable services when the hospital does not participate with the patient’s health care plan;
  • The circumstances and complexity of the case, including the time and date of the service; and
  • Individual patient characteristics.
Q-16. When determining a reasonable fee in cases when the health care plan and hospital had previously entered into a participating provider agreement, what are the payment and fee amounts from which the IDR entity must select?
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Under Financial Services Law § 605(e), either party may submit a dispute to IDR relating to the payment to the hospital, and a hospital may seek additional payment from the health care plan prior to a decision by the IDR entity. The IDR entity must select either the health care plan’s last and best offer of payment when the IDR process is initiated, which may be different than the amount that is 25% greater than the previous contracted rate, or the hospital’s last and best offer when the IDR process is initiated.

Q-17. When a hospital’s fee is the subject of an IDR, should the dispute be reviewed by the IDR entity at the charge level or at the overall Diagnosis Related Group (DRG) level for the total bill?
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The hospital’s fee should be reviewed in total and components of the fee may be grouped together using a generally accepted grouping methodology. The health care plan, and hospital as applicable, should disclose how the hospital charges are grouped for purposes of determining the payment amount.

 

Assignment of Benefits Form

Q-18. Has DFS developed an assignment of benefits form that hospitals must use?
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DFS has developed an assignment of benefits form and strongly encourages hospitals to use it to obtain payment directly from health care plans; however, hospitals are not required to use the DFS form at this time.

Q-19. Must health care plans permit insureds to assign benefits or payment of monies due to hospitals for emergency services if the insured’s policy or contract contains a clause that prohibits assignment of benefits or assignment of monies due other than for a surprise bill?
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Yes. Chapter 377 of the Laws of 2019 permits insureds to assign benefits to hospitals for emergency services. Health care plans should administer their policies and contracts in accordance with the law and update their policies or contracts during their next submission to permit such assignment.

Q-20. May a health care plan pend a claim for emergency services provided at an out-of-network hospital to request a copy of the assignment of benefits form from the hospital?
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No, if the hospital’s claim form indicates that an assignment of benefits form is on file with the hospital and the claim is otherwise payable, the health care plan should treat the claim as a clean claim, adjudicate it, and pay the hospital directly. The health care plan may request a hard copy of the assignment of benefits form but should not delay processing of the claim solely due to the request for the form. If the hospital’s claim does not indicate that an assignment of benefits form is on file with the hospital, the health care plan should pay the claim in accordance with the terms of the insured’s policy or contract.

 

How the New Laws Work with the Hospital Cooling Off Period

Q-21. Chapter 377 of the Laws of 2019 contains requirements regarding mediation for contractual disputes between a hospital and a health care plan. How does this new law work with the cooling-off period in Insurance Law §§ 3217-b(i) and 4325(j) and Public Health Law § 4406-c(5-c)?
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IInsurance Law §§ 3217-b(i) and 4325(j) and Public Health Law § 4406-c(5-c) require that if a contract between a hospital and a health care plan is not renewed or is terminated, the parties shall continue to abide by the terms of the contract for a period of two months from the effective date of the termination or the end of the contract period. Chapter 377 of the Laws of 2019 added Insurance Law §§ 3217-b(l) and 4325(m) and Public Health Law § 4406-c(5-e) to require a health care plan and hospital to use a mutually agreed upon mediator to assist in resolving any outstanding contractual issues at least 60 days prior to the termination of the contract between the health care plan and the hospital. Chapter 377 of the Laws of 2019 applies 60 days prior to the termination of the contract. The cooling-off period in Insurance Law §§ 3217-b(i) and 4325(j) and Public Health Law § 4406-c(5-c) begins from the date of termination or nonrenewal and runs for two months from that date. The two time periods run consecutively.

Q-22. How does the required health care plan payment amount under Financial Services Law § 605(e) work with the cooling-off period in Insurance Law §§ 3217-b(i) and 4325(j) and Public Health Law § 4406-c(5-c)?
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Since the parties are required under Insurance Law §§ 3217-b(i) and 4325(j) and Public Health Law § 4406-c(5-c) to continue to abide by the terms of the contract for a period of two months from the effective date of the termination or the end of the contract period, the hospital would still be considered in-network during this two month period and the dispute resolution process for non-participating hospital services in Financial Services Law § 605, including the required health care plan payment amount in Financial Services Law § 605(e), would not apply until after the cooling-off period has ended.

 

Mediation Requirements

Q-23. May a health care plan and a hospital agree to waive the mediation process under Chapter 377 of the Laws of 2019?
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Chapter 377 of the Laws of 2019 requires the parties to utilize a mutually agreed upon mediator to assist in resolving any outstanding contractual issues. The law does not provide for a waiver of this requirement.

Q-24. Health care plans and hospitals may have existing participating provider agreements that pre-date the requirement to use a mutually agreed upon mediator. Those agreements may not contemplate the use of an agreed upon mediator. Does this requirement apply to existing participating provider agreements without an agreed upon mediator?
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Chapter 377 of the Laws of 2019 took effect on January 1, 2020. Health care plans and hospitals should attempt to agree to a mediator to resolve the dispute for any contracts that may terminate on or after January 1, 2020. Health care plans and hospitals should add provisions to their participating provider agreements that are issued or renewed on or after January 1, 2020 to comply with this requirement.

Q-25. Does the requirement to use a mutually agreed upon mediator apply when the contract between the hospital and the health care plan is expiring at the end of the fixed term and not being renewed?
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The requirement to use a mutually agreed upon mediator in Insurance Law §§ 3217-b(l) and 4325(m) and Public Health Law § 4406-c(5-e) applies both to termination and when the contract between the hospital and the health care plan is not being renewed at the end of the fixed contract term.