The New York State Legislature introduced a bill (S.5068A/A.7489B) to address benefit coverage for out-of-network care by health insurers. The stated purpose of the bill is to protect enrollees that purchase premiums to permit choice and cover the cost of treatment by out-of-network providers, but who are still faced with sometimes expensive and unexpected out of pocket costs as a result of the payment amounts from insurers in relation to the actual costs of care. To do so, the bill requires any health insurance carrier to provide significant coverage of the “usual and customary” costs of out-of-network health care services (defined as at least 80% of the FAIR Health rate) and include this methodology in the plan contract. The Act would apply to all policies and contracts issued, renewed, modified, altered or amended on or after the effective date. The bill is currently in committee in both the Senate and Assembly with the legislative session ending June 21.
The inconsistent methodologies used by insurance carriers for determining the “usual and customary costs” has created many unresolved issues in an already complicated area, which has several interested parties involved in the debate – patients, in-network providers, out-of-network providers, and third-party payers. The patients and providers argue that patients and employers who pay for the right to see the physician of their choice should be able to avail themselves of this right without incurring expensive and unexpected out of pocket costs as a result of grossly insufficient payment amounts from insurers, while the insurers argue that requiring higher reimbursement amounts would raise premiums and be a disincentive for providers to stay in-network.
The bill follows the Attorney General’s 2009 investigation into UnitedHealthcare’s use of the Ingenix database for determining out-of-network coverage and subsequent settlement with UnitedHealthcare and 11 other carriers for nearly $100 million. The settlement involved the creation of a new database to be maintained by FAIR Health that more accurately assesses out-of-network reimbursement. The goal of the new database is to ensure that patients, employers and health insurers have accurate information concerning the true cost of out-of-network medical services.
This post was contributed by Charles Dunham.