BILL NUMBER:S5927

TITLE OF BILL:  An act to amend the public health law and the
insurance law, in relation to utilization review agents

PURPOSE OR GENERAL IDEA OF BILL:

This bill will provide greater transparency in the health insurance
utilization review process by prohibiting an agent from having a
familial, financial, or professional relationship with the reviewed
entity.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends section 4905 of the public health law by adding a new
subsection (16) which further defines the list of prohibited practices
by utilization review agents. Specifically, the bill provides that no
utilization review agent may conduct a review of any entity in which
it has a "material familial affiliation, a "material financial
affiliation" or a "material professional affiliation."

Section 2 amends section 4905 insurance law by adding a new
subdivision (n) which further defines the list of prohibited practices
by utilization review agents. Specifically, the bill provides that no
utilization review agent may conduct a review of any entity in which
it has a "material familial affiliation, a "material financial
              

affiliation" or a "material professional affiliation."

Section 3 provides that the bill will take effect immediately.

JUSTIFICATION:

This legislation will promote transparency and equity in the
utilization review process by ensuring that agents are independent,
having no existing relationships with the reviewed entity.Therefore,
all parties - both consumers and entities alike - will be assured that
all determinations are impartial and related only to the facts at
hand.

With the current status of the law, healthcare insurance carriers are
put in the position where collusion with hospital providers may be
taking place while they insist that all they are doing is negotiating
to obtain the best possible rates for their customers. At a minimum,
this practice should be prevented to avoid the appearance of
impropriety so consumers can have confidence that they are not being
cheated by the carriers.

The prevailing practice is for insurance carriers in New York to
negotiate contracts with all of the major provider networks. These
contracts include negotiated hospital rates which are then shown to
their customers as proof that the customer is getting the best
possible deal and the most "bang for the buck". The carriers do not
advise customers about other language in the contracts. Specifically,
carriers have been negotiating limitations on their ability to perform
utilization review type activities. They will limit the number of
cases that can be reviewed and place other restrictions on the process
which serve to protect the provider. This can become a "quid pro quo"


for the provider reducing their rates in the negotiation. The
providers know that any losses they incur through negotiating lower
rates will be made up by limiting review.

Through this process, the carriers and providers effectively become
partners. The carriers understand that if they were to challenge
billings and services through the review process, their business
partner will be weakened and will not offer them the same reduced
rates in the next negotiation. This could cause them to lose customers
who are shopping for better rates. This clearly creates the appearance
of a financial and professional relationship with the providers that
is not in the best interests of consumers. Creating limitations on
reviews or otherwise colluding to avoid taking money back from your
business partner causes consumers to pay for unnecessary services and
to overpay for appropriate care.

A requirement that utilization and other healthcare type review can
only be performed by independent groups who do not have a financial
relationship with the providers will limit the possibility of
conflicts of interest.

PRIOR LEGISLATIVE HISTORY:

New Bill

FISCAL IMPLICATIONS:

None to the State.

EFFECTIVE DATE:

This act shall take effect immediately and deemed in full force April
1, 2014.