S8414.A-A9019.A – Plan Provider Contract Provisions

The New York Health Plan Association (HPA) opposes S.8414-A/A.9019-A, which would mandate greater detail in health plan contracts with providers.  Specifically, the bill would require that the contract provide information on the reimbursement rate and how it is calculated, the member and service for which the payment is being made, the method of payment for submitting reimbursement, and the median rate paid for comparable services within the provider’s service area.

This legislation is overly prescriptive and unnecessary.  First, physicians and health plans, by contract agree to various terms and conditions including the reimbursement rate for various services and standards for transmitting payment.  Providers do not need an additional “helping hand” from the Legislature.  While the sponsor’s memo notes the bill will help medical practices in tracking revenues and expenses, standardized 835 Electronic Remittance Advice utilized by health plans, physician practices, health care facilities and billing companies, provides itemized information explaining what is being paid so that the provider is able to associate the reimbursement with the claims submitted.

Additionally, the provision requiring health plans to include the median rate for comparable services in the provider’s service area will lead to higher costs for consumers and employers without providing any meaningful benefit to them.  Contrary to the sponsor’s memo, which indicates that insurers typically negotiate provider contracts from a position of strength, the legislation is based on the false assertion that health care providers lack bargaining power.  The reality is that providers come to the table with significant leverage and have been using that leverage to obtain higher reimbursement rates.  Further, the Federal Transparency in Coverage Final Rules required health plans to disclose machine-readable files containing in-network rates for covered items and services, with monthly updates to the files, beginning July 1, 2022.  Requiring that health plans provide the median rate is redundant of federal transparency efforts, and S.8414/A.9019 will merely increase health care costs and higher administrative costs for health plans at a time when the focus should be on making health care more affordable for New Yorkers.

For all these reasons, HPA opposes S.8414-A/A.9019-A.